International Youth Day: PPF, NPS, Gold ETF, Equity Mutual Fund Among Best Investment Schemes For GenZ In 2024

It is International Youth Day on August 12, designated as awareness day by the United Nations. The key core of this day is to bring attention to a series of cultural and legal issues that revolve around youth. Awareness of investment, wise choices and savings is also vital for the growth of youth in the future. There is a saying, that the earlier you start investing, the better your retirement.

And what better option than the days of youth to begin your first investment? Indian financial market is vast and widespread, and there are a host of investment options, offering guaranteed returns, and risk-free assets to schemes that can potentially safeguard investment amidst uncertainties. Some schemes have a far greater spectrum of multiplying wealth than traditional old schemes. Not just that, some schemes do not even require hefty sums for investment and can be opened for as cheap as Rs 100 or Rs 500.

The horizon of investment is enormous, offering diversity, flexibility, affordability, and with potential to cater for all classes' needs.

The youth of India is a mixture of generations from millennials to Genz, Gen Alpha and much more. Gen Zs are playing a great transformative role in shaping the future right from socially, and innovatively to adaptability. So, why it is always good to start early savings and investments as Gen Z?

Why Should You Start Investing When You Are Young?

As per Kotak Life's blog, here are five reasons to why start investing when you are young. These are:

1. Compounding Interest: Compound interest is the interest earned on both the principal and accumulated interest of your investment.

2. Time is on Your Side: Starting early gives you the luxury of time to explore different types of investments and take more significant risks that can potentially lead to higher returns.

3. Develop Good Financial Habits: You will also develop discipline, patience, and long-term thinking, which will serve you well in all aspects of your financial life.

4. Higher Earning Potential: As your investments grow, you can reinvest your earnings to generate even more significant returns. Additionally, the money you earn from your investments can be used to start new ventures or invest in other opportunities that can increase your overall wealth.

5. Achieving Long-Term Goals: Investing can provide a solid foundation for your financial future, ensuring that you have the resources you need to accomplish your goals.

Best Investment Schemes For Youth In 2024:

1. Public Provident Fund (PPF):

This scheme has low risk and can be opened at India Post Office and banks. The minimum here is Rs 500 and can rise to a maximum of Rs 1.5 lakh in a financial year. The rate of returns is at 7.1% offered by PPF. The tenure of the scheme is 15 years. There are also tax benefits under section 80C of Income Tax, available here.

2. Post Office Monthly Income Scheme:

Backed by the government, there is zero to low risk to investors. Here, the minimum investment is around Rs 1,000, while the maximum amount is Rs 9 lakh in a single account and Rs 15 lakh in a joint account. The rate of interest is at 7.4%. The account can be closed on expiry of 5 years.

3. Government Securities:

As per RBI, A Government Security (G-Sec) is a tradeable instrument issued by the Central Government or the State Governments. It acknowledges the Government's debt obligation. Such securities are short term (usually called treasury bills, with original maturities of less than one year) or long-term (usually called Government bonds or dated securities with an original maturity of one year or more). G-Secs carry practically no risk of default and, hence, are called risk-free gilt-edged instruments.

4. National Pension Scheme (NPS):

National Pension System (NPS) is a pension cum investment scheme launched by the Government of India to provide old age security to Citizens of India. It brings an attractive long-term saving avenue to effectively plan your retirement through safe and regulated market-based return. The average return in NPS is between 8% to 12%.

5. Sovereign Gold Bonds:

SGBs are government securities denominated in grams of gold. They are substitutes for holding physical gold. Investors have to pay the issue price in cash and the bonds will be redeemed in cash on maturity. The Bond is issued by Reserve Bank on behalf of Government of India. The Bonds bear interest at the rate of 2.50 per cent (fixed rate) per annum on the amount of initial investment.

6. Equity Mutual Fund:

As per AMFI data, equity funds are very popular amongst retail investors among various categories of mutual fund products. Whether it's a particular market sector (technology, financial, pharmaceutical), a specific stock exchange (such as the BSE or NSE), foreign or domestic markets, income or growth stocks, high or low risk, or a specific interest group (political, religious, brand), there are equity funds of every type and characteristic available to match every risk profile and investment objective that investors may have.

7. Unit-linked Insurance Plans (ULIPs):

According to ICICI Prudential Life Insurance data, a ULIP is an insurance plan that offers the dual benefit of investment to fulfil your long-term goals, and a life cover to financially protect your family in case of an unfortunate event. The premium paid towards a ULIP is divided into two parts. A part of it is contributed to your life cover, and the remaining is invested in the fund of your choice. You can choose to invest in equity, debt, or a combination of both funds as per your risk appetite and goals.

8. Gold ETF:

Gold Exchange Traded Funds (ETFs) are simple investment products that combine the flexibility of stock investment and the simplicity of gold investments. ETFs trade on the cash market, like any other company stock, and can be bought and sold continuously at market prices, as per NSE.

9. Corporate Bonds:

Data from NSE highlighted that corporate bonds are debt securities issued by private and public corporations. Companies issue corporate bonds to raise money for a variety of purposes, such as building a new plant, purchasing equipment, or growing the business. When one buys a corporate bond, one lends money to the "issuer," the company that issued the bond. In exchange, the company promises to return the money, also known as "principal," on a specified maturity date.

10. Initial Public Offering (IPO):

Potential advantages of investing in an IPO include the prospect of obtaining listing gains if the company debuts at a price surpassing the offer price. If an investor, having applied for shares at the offer price, receives them and the company opens at a higher price, significant profits can be realised, as per Kotak.

Disclaimer: The write-up is just for information purposes, and is not a recommendation to buy, sell or hold. We have not done fundamental or technical analysis and have no opinion on article mentioned. Neither, the author nor Greynium Information Technologies should be held liable for any losses. Please consult a professional advisor.