How to Invest in Your 20s?
“Freedom” is a very expensive word.
You have probably crossed your teenage and you want your freedom. You don’t want to be shadowed by your parents or your job or any other unnecessary commitments that you might have. Eventually, you realise you cannot live like this all your life. Therefore, decide to invest in your 20s both for the long term as well as the short term.
But, you don’t have a strategy yet.
Fear not! Because this blog is going to elucidate on the different ways that you can start saving and investing at a young age.
Investing in your 20s is an important step towards securing your financial future. It’s never too early to start thinking about how to best use your money to achieve your long-term goals. In India, there are a variety of different ways to invest and save money in your 20s. Here are a few tips to help you get started.
Also check out our article on investing at a young age here.
How to Save Money and Invest in your 20s?
Let us go through the steps involved in saving and investing money in your 20s:
Start with a budget
One of the most important steps in saving money is to create a budget.
A budget is a financial plan that outlines an individual or organisation’s expected income and expenses over a specific period.
Creating a budget will help you understand where your money is going. It will give you a brief idea as to where you can cut back to save more.
Invest in Public Provident Fund (PPF)
Public Provident Fund (PPF) is a long-term savings scheme in India. It provides tax benefits and a fixed rate of interest to the account holder.
It makes an attractive option for young investors to grow their savings and optimise their personal finances.
Invest in Equity-Linked Savings Scheme (ELSS)
ELSS stands for Equity Linked Saving Scheme, which is a type of mutual fund in India that offers tax benefits and invests primarily in equity securities.
It has a lock-in period of 3 years. This makes it an ideal option for young investors looking to invest in the stock market.
Invest in digital gold in your 20s!
Digital gold is a new and growing trend in the world of investing. It allows individuals to purchase and own gold in a digital format.
Investing in digital gold allows for easy and convenient access to gold as an asset class without the need for physical storage or delivery.
One popular platform for buying and holding digital gold is the JAR app, which is a mobile app that allows users to buy, sell, and hold digital gold.
Consider SIP investment
SIP or Systematic Investment Plan is a method of investing in mutual funds. It is an easy and convenient way of investing a small amount of money every month in a mutual fund
This way you can invest in mutual funds without worrying about timing the market.
Invest in Real estate in your 20s!
Real estate investments can be a great way to build wealth over time.
The best benefit of investing in real estate is the potential for long-term passive income through rental income or capital gains from property appreciation.
While investing in real estate is a long-term commitment. It can be a good option for those who have a stable income and can afford to make regular payments.
Start an emergency fund
An emergency fund is a sum of money set aside to cover unexpected expenses or financial emergencies, such as job loss or medical bills.
The best benefit of having an emergency fund is that it provides a financial safety net and helps prevent the need to rely on high-interest debt or deplete long-term investments during times of financial hardship.
It’s important to have an emergency fund in case of any unforeseen circumstances. This fund should be easily accessible and should be enough to cover at least six months of living expenses.
Takeaways!
In conclusion, there are a variety of different ways to invest and save money in your 20s in India. It is important to start with a budget and then invest in a mix of options such as PPF, ELSS, and digital gold. SIPs, Real estate, emergency funds and other platforms like JAR app can be used to invest in your 20s.
It is important to consult with a financial advisor to understand the tax implications and the suitability of these options.
Some may help you with your financial journey and some may not.
Always remember to play the long-term game and never to opt for short-term benefits which include high risks.