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Published on September 20, 2019
Most of us believe that investing is for adults with jobs and an income. But the truth is that there is no right age to start investing. In fact, these days, the younger generation is becoming more responsible and aware of the need for a financially secure future. Changing life patterns have made students more open to investing and using their age as an advantage to start early. Mutual funds can serve as a prolific investment avenue that can offer them profitable returns. It can also be used to help them achieve their goals, such as sponsoring their higher education, saving for a bike or planning a vacation.
Low SIP investment options
SIP in mutual funds starts as low as Rs.500. So, students who do not have a steady source of income can invest in mutual funds relying on their modest savings or pocket expenses from their parents.
The stock market holds immense opportunities. Students can park their money in time-tested mutual fund schemes through SIPs that are low in risk and could offer high returns due to diversification.
Benefits of investing in mutual fund schemes
SIPs in mutual funds are an ideal investment option for students because of the following advantages:
Criteria for choosing a mutual fund scheme
There are multiple mutual fund schemes available for everyone depending on their financial goals, risk appetite and investment horizon. If a student’s investment horizon is five to ten years, equity funds can be an excellent option. Fund managers recommend investing in equity funds through SIPs that can help them tide over market volatility in the long run and average the purchase.
However, if the investment horizon is three years or lesser than that, it can be a good idea to invest in debt mutual schemes. Debt mutual funds offer marginally higher returns compared to bank accounts.
Having said that, it is always a better idea to invest for at least five years to give investments time to grow. Equity-oriented hybrid schemes can be a good option as they are considered as balanced schemes offering excellent returns. Lastly, students can take the help of professionals to learn more about how the stock market works to make informed decisions based on their investment profile.
Conclusion
Mutual fund investment can help you grow your money and save for the long run. As a student, you can start early and stay invested for a longer period. Start by reading about what is a mutual fund and how to invest in SIP. This can help you build interest in investing and use your money wisely towards a secure future.