Congrats! You have made a great decision to start investing early in life.

What are the options?

  • Gold – You can invest in Gold if you want to hedge against equity investments and diversify your investments. Not recommended for aggressive investors.
  • Real Estate – Good for consumption but not for investment in the current market situation. Also, you need a large down payment and a long term commitment to getting into real estate. Of course, if you pick the land/apartment right, you can make good returns.
  • Direct Stocks – Excellent option for high returns if you have time to study and interest to acquire deep knowledge about the companies/industries.
  • Mutual Funds – Best investment option for a person who has a day job and is willing to invest for long term. mutual Funds investments are hassle free and paper free. Check registered platforms such as Groww to analyse various mutual funds and invest online.

What is the best way to invest?

The best way to invest monthly savings is SIP. Systematic Investment Plans are a monthly commitment of a fixed amount in a selected mutual fund. Since you are investing regularly, the market timing risk is negligible and the growth upside is huge. You can read all about SIP here – All About SIP.

Right Asset allocation for your monthly investments –

Total Savings = 80K

Planned expenses = 18K

  • Contingency fund = 7 K – This should keep liquid. You can check liquid funds such as Liquid Mutual Funds.
  • Monthly investments = 55K – This amount you should diversify among the various category of Funds. In the mid 20s you can take higher risk. For example, check this portfolio High Growth SIPs for Long Term. There is no lock-in on the investments made in such Mutual Funds.You can edit the portfolio and add/remove the funds you want to invest in.
  • Tax Saving – You should also invest a part of your savings (up to 1.5 lac a year) in ELSS – Tax Saving Mutual Funds. You get 100% tax exemption on these investments and the lock-in is only 3 years. Read all about ELSS here – ELSS Funds for Saving Tax – All You Need To Know About

Hope this helps!