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21 Oct 2020

Best Investment Plans For Students In India

CoinSwitch Kuber

Going down memory lane, my years in college reminds me of happier times and regret-free experiences. My college life was filled with learning. But, if I could go back in time and confront my younger self, I would ask myself to start investing.

Had I started investing with my small savings back then, I would have gotten a headstart in wealth creation. But is it possible to start investing as a student?

If you are a student too and wondering whether you have what it takes to take the plunge into the world of investing, look no further.

In this article, I have tried dispelling the myths around investing as a student, what you require, and how to get started. 

So just read on!

Why Investing As Student Makes Sense

Investing while you are in college may not sound very easy. You may be earning very little money, have meager savings, or too busy to be bothered with the idea of investing.

But you should know that investing at such a young age comes with its advantages such as: 

  • Building strong financial habits
  • Laying the foundation for building wealth
  • Freedom to experiment with your risk appetite 
  • Little money to invest means less financial risk.
  • Adequate time for research and investment

With time by your side, students have an incredible superpower – the power of compounding

Compounding means the profit earned will be added back to the principle allowing it to grow further.

If you start investing now by putting aside ₹100, assuming at the rate of 6%, you will have ₹7147 in 5 years and ₹201,241 in 40 years. 

As you can see, the long term benefits of compounding are pretty evident. However, compounding works well in the short term too!

Assuming that you have just begun college, if you save ₹100 every month for three years in a fixed income asset such as deposits, you would be able to amass ₹4,169 by the time you graduate! 

Of course, this money is not a lot but my point being, if you start early and invest a little more, you will have saved more buy the time you graduate.

If the prospects of investing early excite you, keep the following things in mind before you begin: 

  • Keep a budget in place that ensures you have a regular surplus for investment.
  • Try to get debt-free, pay off all the little sums you owe your friends, cut down on unnecessary expenses.
  • Keep a savings account in place to hold all your surplus money.
  • Do adequate research on all the investment vehicles and figure out what suits you.

Once you have taken care of the basics and have a steady surplus,  the next step is to select the right investment avenue.

Best Investment For Students India

There are a plethora of investment options in India that cater to investors with various risk profiles and return expectations. I am listing down the most popular ones.

#1. Dip In Mutual Funds via SIP’s

Mutual funds offer a well-diversified, low-cost, and flexible way to make your savings grow. It is a pool of funds managed by professionals and invested in equity and debt securities and thus ideal for students who do not have direct expertise in the stock market.

You can explore equity funds if you are a risk-taker or go for debt funds if you are more on the conservative side.

Or you can split your investment amount in equity and debt to build a balanced portfolio based on how much exposure you want to the market.  

You can invest in mutual funds through SIP ( Systematic Investment Plans), which allows you to invest a fixed small amount of money at regular intervals to bring down the investment cost.

One can invest in Mutual Funds with an amount as low as ₹500 per month; some mutual funds allow SIP amounts as low as Rs 100 as well, which is ideal for students to save even from their pocket money or internship.

#2. Bonds

Bonds is how the government and companies borrow money from the general public in return for fixed interest. Here, you are required to stay invested in a bond for a defined period,, and on maturity, you will receive your principal amount plus the interest.

There are typically two types of Bonds, Long term and Short term. Long term bonds generally yield higher returns than short term bonds.

However, it is one of the safest investing mediums out there where students can invest.

#3. Explore The Crypto Markets

Being a student, if you have overlooked crypto markets, then I would say you are missing out. Cryptocurrencies are nothing but decentralized virtual currencies that have shown great promise since inception.

For example:

 Bitcoin – the first cryptocurrency introduced in 2009 started trading at $0.0001. Its value has grown million fold in a decade and is currently worth over $10,000.

Many students might shun away from crypto markets, thinking that the currencies are too pricey for their budget. Though Bitcoin’s writing value is around ₹800,000, there are subunits of Bitcoin to buy for how much ever money you are looking to invest in it.

The minimum investment amount varies at different exchanges. You can start your investment with as little as ₹100 using the CoinSwitch Kuber app. 

Buy Crypto With Just Rs.100

However, it is a young market, and hence it is advisable to understand it before investing. Investment educational initiatives like KuberVerse can provide potential investors with much of the knowledge required. Still confused between, Bitcoin and Mutual Funds Read our blog on Bitcoin vs Mutual Funds a better investment option.

#4. Learn About Share Market

Investing in direct equities i:e the share market is a good option provided it matches your risk-bearing ability.

While trading may be too risky for novice investors, you can still look at high growth stocks that have strong fundamentals ( strong financials, good management quality, sustained competitive advantage over peers, and ability to innovate ) and hold these stocks for the long haul.

Fundamentally strong stocks that have stood the test of time have mostly rewarded steadfast investors with inflation-beating returns.

However, it is better to educate yourself about investing in the stock market before investing. As you slowly gain confidence and increase your competence circle, you can gradually increase the stakes.

#5. Try Deposit Schemes

Deposit schemes are one of the safest vehicles of investment. Deposits will pay you a predetermined present rate of interest periodically on a sum of money kept for a certain period with the bank.

This can be one option for students, too, and in India, two types of deposits are available:

  • Fixed Deposit: They have a fixed tenure – can be short term or long term based on the customer’s investment portfolio—FD’s offer a higher rate of interest than other savings schemes. 
  • Recurring deposit: Like FD’s except, the deposit is made by paying a certain sum of money at regular intervals.

Sooner the Better

The most important thing for students looking to invest is to – get started now!! The later you plan to make your investments, the more amount you will need to put aside. 

“Compound interest is the eighth wonder of the world. He who understands it earns it, he who doesn’t pay it”

– Albert Einstein.

The sooner you begin to invest, the sooner you will learn about the financial markets. It will enable you to start building a secure financial future. Students who begin with a small amount of investment grow both their knowledge and wealth over time.

FAQ on Best Investment Plans for Students

1. Which mutual fund is best for students?

ICICI Prudential, Axis, Mirae assets etc. are some excellent performing mutual funds.

Since Mutual funds are financial pools managed by various fund managing institutions, selecting the right fund for yourself is crucial.

2. What is the best investment ideas for students to invest their monthly surplus savings?

Since students are unaware of the market know – how’s, investing in Mutual funds could be an ideal choice for them.

They can invest their monthly surplus in Mutual funds through SIP.

3. What is the best saving investment plan for students?

The best way to go about this for a student would be to start investing in Deposit schemes and Mutual funds and continue exploring markets like equity and cryptocurrencies.

This way they are investing in the safest medium and learning about high yielding instruments so that when they eventually get into those markets, they make sound choices

4. How do I start investing as a student?

Deposit Schemes and Mutual are the go-to mediums for students who want to start investing.

But at the same time, I would also suggest you explore cryptocurrencies because the market for it in India has already kick-started and you don’t want to miss the opportunities that cryptocurrencies have to offer.

[su_note] KuberVerse is an educational initiative. Anything expressed here directly or indirectly is not investment advice. And we ask you to do your own research before investing. [/su_note]

Disclaimer : Crypto products and NFTs are unregulated and can be highly risky. There may be no regulatory recourse for any loss from such transactions. The information provided in this post is not to be considered as investment/financial advice from CoinSwitch. Any action taken upon the information shall be at user's own risk.

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CoinSwitch Kuber

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