A young mind is full of enthusiasm, passion and exciting approach towards life. It is a stage where a teen is stepping towards to become a man or women. Being young is wonderful. In young age, we all have best ever balanced physical, mental and emotional power to experience new things and to learn new hobbies, habits and enjoy the life to the fullest but this stage is also important for your career and growth. When we are young we often do not worry about taking risks and it sometimes trades us with great opportunity and sometimes it becomes the reason for our downfall. Investment is a thing that no school teaches you. Every school teaches you about how to earn money but no school teaches you about how to invest that money so that your hard earned money stays with you.
The money you invest depends upon your income but certainly what kind of investment and what percentage you should invest is something we should learn from experienced people. Here is what a young investor should start:
Health Insurance
Health insurance is a very important investment that one should make. Healthcare is very costly and can take a lot out of your pocket. Insurance helps you in paying the bills that will save you money. Insurance is a tool designed for proving the insurer with a protection plan that can be used when the insurer is hospitalized. For this, the insurer must pay a premium every year. In a state like Delhi, a dengue medication can easily cost more than Rs.2 Lakhs and this amount can be paid off by using the insurance.
Term Insurance
Term insurance is an insurance that does not come with the maturity benefit and provides more cover than a non-term insurance plan. Although term insurance is considered to be after marriage plan but, the fact that early you start, less you pay comes into play. Since this stage is the building block of your future therefore future investment is also important.
SIP / Mutual Funds
A Mutual fund is an investment tool provided to invest in the stock market by using a professional investment company. These companies trade in the stock by accumulating the fund of various clients and then investing the amount in the stock Market. It is led by the market expert hence the risk is less as a professional is better at making you money than you yourself investing in the market.
PPF or NPS
PPF stands for Public Provident Fund which is a savings account designed to provide financial support at the time of retirement. Planning your full financial future will provide your life with stability and satisfaction. Investing in PPF or NPS which stands for National Pension Scheme will provide huge ROI for the money you invest with a tax benefit. You can find the maturity amount you will get by investing in the monthly or yearly installment by using the PPF Calculator.
Invest in a Business
You could be an employee of a company earning a very good amount of money but you can still invest in the business to keep your money getting doubled or tripled. This can be done by passively partnering in businesses. Most millionaire and billionaire has 100 business ventures and they are just non-active participants who invest in other business and earn a profit. If you have money idle then you can invest that money in other businesses and earn a profit. Whenever an investment is a concern it is important to note that there is a risk involved especially in business therefore, accessing the business plan and market before investing is important.
Things to Look for in an Investment Tool
In commerce, there are terms called “Asset” and “Liability” which are the basic deciding factor whether you are earning money to losing it. An Asset is what puts money in the pocket ad Liability is what takes money out of your pocket. The investment tool provided by any firm like banks, Post Office or any other financial institution must be accessed by concluding these factors. Apart from these, you have to consider the following factor that an investment tool must have-
Tax Benefit
Tax is everywhere, whenever we buy something we pay tax and we even pay tax for earning money from business or a job. Almost 20-30% of our wealth is consumed by the taxes and these percentages can be reduced by availing some investment tool that provides tax benefit like a PPF Account. There are two types of Tax benefits, the tax exemption on the maturity amount of the investment and a tax benefit that you will get every year when filling the ITR.
What is ROI?
ROI stand for Return on Investment and this is the most important factor to consider while selecting an investment tool. The greater the number is the greater will be the profit. So implementing the strategy for increasing the ROI can create an investment tool that will be perfect for your financial goals.
Risk Involved
A Risk is involved in everything like investing in a business, taking a scheme, etc. You must assess the risk involved in the investment before investing any money. It is also important to know that one should also learn the Risk Management
