PEAKLIFE

Young urban Indians who are stepping into financial independence are gradually beginning to understand the benefits of investing a portion of their savings. Starting an investment journey at an earlier age not only allows them to accrue more returns over time, but also encourages healthy financial habits. It is important for people who have recently entered the job market to explore the various ways of building a strong and differentiated portfolio, and plan ahead for building long-term wealth. Fortunately, there are several secure and rewarding options for young investors who are just starting out on their investment journey.

Life Insurance

Life insurance is typically purchased for the purpose of risk management, but due to its tax benefits, it can be considered an investment. In the correct context and if used strategically, it can supplement regular income post-retirement, or be directed towards building inter-generational wealth. Policy-holders can structure ongoing premiums throughout their working years, which adds tax-deferred cash value. Upon retirement, this policy can be turned into a source of income. Results depend on the insurance company, but the tax advantages are undeniable.

Mutual Funds

One of the most popular investment pathways for young professionals, mutual funds are a cost-effective way to access a diversified portfolio managed by professionals. Multiple investors pool in money to invest and achieve a common goal. The investment could be in equity, bonds, money market instruments, etc. The investor’s participation depends on the number of units held by them. The asset management company charges annual fees, but this is a good option for beginners who do not want to invest a large amount or constantly research and track investments.

Retirement Plans

Government or employer-sponsored retirement plans are long-term undertakings that do not require much hard work from the investor. The money, when contributed, is not taxed, thus reducing the investor’s tax bill. Over time, the money grows, tax-free. Upon withdrawing the amount at retirement, the investor pays tax. Some employers also match the employee’s contribution, which is a guaranteed return.

The safest investment advice for young people is to consider their options, gauge their risk appetite, and start small. With the abundance of information and resources at their disposal, young Indians can very conveniently establish a solid foundation for future economic success and financial stability.