Investing money for financial growth is an objective for everyone belonging to different age groups globally. And college students are highly energised in this regard. While they are about to start their journey to a career and earn income, investments can boost their confidence. It also cultivates financial knowledge that can help them make well-informed decisions in life. So, what are the different investment options for students in India? Here is a detail to help them better.

Before we get started, let us understand the financial investment objectives for college students in India. 

Objectives of Investment Plans for Students In India

Choosing investment schemes will depend on individual objectives and affordability. Here are a few possible investment objectives.

• Repay educational loan.
• Support hard-working parents.
• Accumulate funds for higher studies.
• Creating funds for starting a new venture.
• Develop the discipline of investing regularly.
• Experiment with different investment schemes for students.
  
  

Investment Options for Students in India

• Mutual funds - Financial securities market is one of the ways to create wealth in the long term. And at a younger age, students can always take more risk in the investment platform. For example, if the investment is based on a student's part-time business or their parent's income, they must be secure while making the investment decisions. They can probably consider a medium-risk investment option.
  
  Mutual funds are secure investment plans for students that help them choose fund options based on their risk profile and affordability. It is also a beneficial option because students can choose to invest in it regularly rather than as a lump sum using the systematic investment plan option. It will develop the discipline of investing regularly while also ensuring adequate returns. Also, mutual funds are managed by expert fund managers who can help students learn to understand their investments and potential growth.

• Government bonds - If the financial objective is to support parents, clear off debts, etc., saving money in government bonds can be ideal. It might provide lesser returns. However, the investment is secure as the government manages it. There are short-term and long-term bonds. Therefore, depending on the financial requirements, students can choose their tenure and invest in it accordingly. 

• Life insurance - Life insurance is considered one of the options for saving if there are many financial obligations. It can help their parents repay their educational loans in the event of their unexpected demise. In addition, a life insurance company provides the option to include add-on riders^# that enhance the financial benefit by providing funds in case of specific scenarios such as getting affected due to a critical illness, terminal illness, disability, etc., during the policy tenure. The students can use it to pay for their hospitalisation and medical expenses.
  
  Insurance providers also provide comprehensive life insurance plans that combine the benefit of life cover, savings and investment needs. Students can pay the annual premium for a specific policy tenure and receive guaranteed¹ returns or market-linked returns at maturity apart from the regular life cover benefit.
  
  And Tata AIA life insurance company provides varied, flexible solutions to customise these plans based on the customer's requirement. For example, students can save in the guaranteed¹ return insurance plan to receive a guaranteed¹ regular income for a defined income period starting from the maturity date. It will help them repay their education loan or fund their business initiatives.

• Cryptocurrencies - Cryptocurrencies are becoming popular due to their variability and increased returns. It is decentralised and offers transparency in the approach at different stages of investment. It is flexible for independent trading and a good choice for long-term investment needs. However, investments in cryptocurrencies require adequate knowledge about the options, platform and process of investment. Therefore, students need to learn the procedure, plan and invest in it accordingly.

• Deposit schemes - The banks introduce different investment schemes for students. Fixed deposits and recurring deposits are the most common among them.
  
  

  • If a student receives a lump sum as a gift from their family, they can save it as a fixed deposit for a certain period. The amount will earn timely fixed interests they can utilise for their educational needs or other hobbies.
    

  • If they receive a fund regularly from a trust or any other institution, they can save it as a recurring deposit. The funds will accumulate along with the interests that become withdrawable at maturity.
    
    

• Derivative market - For students interested in experimenting with different financial market options, derivatives are a great choice. At an early stage in life, students can increase their knowledge of the different underlying assets, their price movements and other factors that affect their demand and supply. It will help them make smarter investment decisions to increase long-term.

Conclusion

Investing in financial instruments is considered a driving force for every college student in India. However, investment decisions have to be made wisely. It has to be based on the sources of income and the financial requirements.

L&C/Advt/2022/Aug/1844