10 investment options you need to consider as a millennial

10 investment options you need to consider as a millennial

The way that millennials invest their money is very different from the way their parents did. Millennials tend to have a much larger risk appetite, and they look for innovative investment products and strategies that can offer them high returns. However, it’s always wise to create a diversified risk pool for your investments, with a healthy mix of riskier investments like direct equity and traditional plans like fixed deposits with steady and assured returns. 

Here are 10 options you can consider as a millennial while creating your investment strategy:

1. Mutual funds: A popular investment choice amongst millennials, mutual funds are a great option if you’re just beginning to invest. Mutual funds are a pool of debt and equity-linked securities and other financial assets managed by a professional fund manager. You can start a Systematic Investment Plan (SIP) that allows you to invest as little as Rs 500 at regular intervals in mutual funds. A popular choice for millennials are Equity-Linked Savings Schemes (ELSS), which are highly diversified equity schemes with a three-year lock in period.

2. Public Provident Fund: One of the most traditional investment avenues, PPF nevertheless remains a great investment option for millennials. While you may choose to extend your risk appetite through other avenues, PPF is always a good idea because of low risk and steady, assured returns on investment. Contributions to PPF are tax deductible under Section 80C of the Income Tax Act.

3. National Savings Certificate: Another government-backed, low-risk investment option is the NSC. With steady, fixed returns, you can begin with investing as little as Rs 100.

4. Direct Equity: If you’re a bit more of an experienced investor and have a good risk appetite, direct equity investment could be the way to go for you. It is extremely susceptible to volatilities of the market, and therefore can be very high-risk investment. But if you understand the markets well and know how to navigate them, then it could bring you higher returns than any other investment avenue.

5. Unit-Linked Insurance Plan (ULIP): Investing in a ULIP, an insurance product, comes with the dual benefit of insurance and investment. You can simultaneously protect yourself or your family against unpredictable events and make returns on the equity market.

6. Fixed Deposit: If you don’t want to venture into riskier investments just yet, Fixed Deposit (FD) will come to your rescue. An FD is a savings instrument that gives you a higher rate of interest than a savings account, and pays you a steady interest for a specific term till it matures.

7. National Pension Scheme: Like the PPF, the NPS is also a government-backed instrument which provides good and steady returns.  Furthermore, it has unparalleled tax benefits. The investment amount is tax deductible unto Rs 1.5 lakh per year. The entire corpus is non-taxable after maturity, as is the pension withdrawal amount and 40% of the annuity.
8. Exchange-traded funds: ETFs are like mutual funds, but they are listed and traded on stock exchanges like shares. ETFs usually track an index such as the Nifty 50 as well as other asset classes. They offer a highly diversified portfolio and high liquidity, and also come with low fees attached because they aren’t professionally managed like mutual funds.

9. Your own business: If you’ve always dreamed of starting your own venture, and have an idea that you think can really take off, you should consider investing in yourself! Save up for a few years by working a corporate job and create a healthy corpus. When the time comes to launch your business, you may not need to depend heavily on banks or venture capital firms to fund you, giving you the freedom to experiment with your idea.

10. Insurance products: Insurance products like health insurance and life insurance are must-haves for any millennial as you begin to plan for your future. Insurance products also come with great tax benefits, as premiums paid on insurance policies are tax deductible under Section 80C of the Income Tax Act. 

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