Best Sources For Investing During the 20’s For Long Term Benefits

Investment is the best option to have a better and planned future. Nowadays youngsters and college graduates and undergraduates, start earning in their early 20’s. This exposes them to various questions regarding investments and tax savings. The reason why young minds need to focus on it is that the early you invest, the better is the return on their investment.

It is important to be financially independent at an early age and hence better investment knowledge in the beginning of earning life is a key to that.

The best way to earn more and keep on increasing the wealth is to try and develop multiple sources of income. A person should not only be dependent on one source of income but should develop more sources so that different classes of expenses can be met alongside pursuing the savings activity.

Investing at an early stage can render many benefits. Most used sources of investment are –

  • INTEREST INCOME 10 – 12%

PPFs (Public Provident Funds) or (Post Office Savings Account)

Talking about the first source of investment PPFs or Post office savings accounts are one of the best sources in India. The early a person invests into it more the benefit. It is one of the safest sources with more benefits. The PPFs offer a mindblowing 7.10% return on the amount put into the account. Also one can put a maximum of 1.5 Lakh Rs in it per year. The maturity date for such investment is 15 years. Hence one cannot withdraw the money invested till 15 years. The best thing about this investment is the tax benefit associated with it. A person investing in such accounts for 15 years can have the interest amount along with the principal amount tax free at the time of maturity. Yes it is correct no amount of tax is to be paid on the amount received at the end of 15 years.

Anyone can invest a maximum amount of 1.5 lakh per year. More amount can also be invested but the tax free scheme is applied to maximum investment of 1.5 Lakh Rs. only. One gets the interest credited at the end of the entire year based on the time frame of all the investment throughout the year. The maximum number of investments are 12 every year. Hence a person can invest only 12 times a year in this year.


SIP is the best investment when a person has a stable source of income. The SIP means systematic investment planning. Here the person has to pay an amount every month in the mutual fund. The minimum amount of investment required is 500 Rs in SIPs. The mutual funds are always risky but they also provide high returns on the amount invested. As per the historic data of 3 to 5 years of a mutual fund a person can find the best suited option for his investments. There are investments varying from Government securities Which is safe and gives a return of 8 to 10% a year and there is also risky investment like bluechip and Multi cap funds and they provide a return of 12 to 18% per year. These funds generally provide this return in a term of 3 to 5 years.


There are shocking effects of investing into SIPs. For one instance let’s take a look at the example of a mutual fund of Kotak Bank which provides a return of more than 16% per year.

If a person invests 500 Rs Monthly every year for 20 years and the return is expected at 16%, the total amount invested throughout the tenure will be 1.2 Lakh Rs and the interest earned is 7.5 Lakh Rs. Hence the entire amount that a person will receive is 8.7 lakh Rs at the end of 20 years. This is the magic of investing for long term benefits.

Also for a person who is investing 1500 Rs per month in the same fund, the total invested amount will be 3.6 Lakh Rs at the end of 20 years. On the other hand the increased or interest amount received on the principal at the end of 20 years would be 22.60 Lakh Rs. The net amount received at the end of 20 years will be 26.30 Lakh Rs.


This investment option is better when you have a huge amount to invest into a mutual fund. It diversifies the risk portfolio but the return cannot be noticed if then investment amount is not more. The reason is a person can only invest for one time in this scheme and then the returns keep on coming every year. Hence if investing in this type of source be generous with the amount of investment.


F.D. is the traditional mode of investing which is the safest and most planned source of investment. This preferred for those people who want minimal risk. These people want a stable source of interest income as well as the amount of their investments.

The normal F.D. rates are 5.4% for the general public in SBI and 6.2% for Senior Citizens. Hence if you invest approximately 100000 Rs for 5 years the amount you get at the end of 5 years will be 1.30 Lakh Rs for the general public whereas senior citizens will get 1.35 Lakh Rs. This is a very safe investment hence the youngsters should keep it only for a minimal amount of their portfolio.


This is the most favoured investments for most youngsters nowadays. All of them want to invest in the stock market and become rich. There is nothing wrong with investing into equities but the only thing that needs to be understood is that getting rich quickly is not the best sort of investment. One can get multiple calls right but when the loss kicks in one becomes unstable. Hence a person should invest small and always plough back the profit earned. Hence reinvesting and diversifying the portfolio is better than quick cash and random calls.


This is for the late 20s when a person has substantial income to risk. There is a system known as shahukars and shroffs who give out money at 12% interest rates and 10% interest rates to small businesses who cannot get loans from banks. Hence a person can also invest in such businesses in their late 20s.

Also there are some big businesses and big startup ideas who want continuous incubation and financial aid. These startups always are in search of angel investors who provide money in place of stake in the company or at interest rates higher than the market. The reason is the risk associated with the existence of such startups. Hence one should also look for investing into such startups because it may become a multi-million Rs. idea and may benefit in long term. There are many such startups which started in the garages and ended up being multi billion dollar companies today.

So young minds should constantly look for new ideas and new ways of investing. There are other ideas such as Gold and Silver as well. The Gold investment is another traditional investment plan and it is followed in mostly all the households of India. Also there are many government bonds and debentures which can be invested into as well.


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