Indians are renowned for their sophisticated financial reasoning, yet there is a severe lack of information and investment appetite when it comes to understanding investing and financial diversification. Young professionals find it challenging to file their taxes, learn about the equity markets, or engage in trading and investing since schools and colleges did not place enough focus on teaching pupils about these significant life subjects.
Less than 10% of Indian families participate in alternative assets like mutual funds or equities, the bulk of which choose to preserve their money in bank accounts. When it comes to stock trading and investing, gold, post office savings, and real estate are favoured.
While there is nothing wrong with safer investment options like Savings and Fixed Deposits, that money’s value could eventually decline due to inflation. This highlights the necessity of early education in stock trading and investing, educating kids about the ideas of compounding, the stock market, portfolio diversification, and much more that may make them more financially literate as adults.
College students have an advantage over other adults who begin investing in their 30s since they are youthful, active, and have the passage of time on their side.
Consider a capital of Rs100. It has the potential to earn 10% a year in returns when invested in Nifty 50 stocks. Rs 110 will be the total sum for the first year, Rs 121 for the following year, and Rs. 133 for the following year.
For college students, the power of compounding really shines since it gives their money more time to grow.
Early investment also enables them to take measured risks without worrying about how they would damage their families and livelihoods. In reality, it provides insight into stock evaluation and investment dangers, enabling customers to evaluate current share prices and watch their rise and fall in order to make wise decisions.
Recently, the Sensex and Nifty both reached their all-time highs when it was thought that Indian shares were valued at their highest ever levels. Although the pandemic has led to a weak economy, negative growth, and the lowest GDP ever, the stock market is shattering all previous records. People who lack understanding tend to label anything as “gambling” or unrelated to reality. However, with the right information and its understanding, you can build generational wealth in a few decades.
Since students are beginners in investing, even a little investment if done properly, may generate significant returns over time and serve as a reliable source of income. It is a fantastic chance for students or recent graduates to generate enormous returns and support their families. It is crucial to have an accurate understanding of the market before starting to invest, even if it is for a small capital.
Here’s a quick tip for student investors:
Invest in businesses or brands that you use frequently, in products that you require frequently and that are in great demand. By doing this, you boost your chances of getting a positive return because you are a consumer of the brand and are assisting them in growing sales and making profits, which will eventually increase the brand’s stock value and benefit you.
It goes without saying that investing is a wise approach to increasing money. However, investing all of your funds in the market out of a desire to make money is not a good idea. Trade wisely by becoming knowledgeable about the financial market. Being an early investor, especially during the market’s all-time high, should enable you to take advantage of the benefits and see your net worth increase.
What investing choices are available to college students?
The most fundamental type of financial investment, a savings account enables you to safely deposit money while receiving interest. On certain occasions, the real rate of return obtained from an investment, also known as the annual percentage yield, exceeds 0.50%.
Fixed Deposits: These types of accounts are comparable to savings accounts but have a fixed term and a higher fixed interest rate.
Stocks: By acquiring a stock, you are effectively buying a share of a certain corporation. Depending on how much stock they possess, the shareholder is entitled to a piece of the corporation’s assets and income.
Mutual funds: Mutual funds pool the money contributed by several investors and invest it in stocks, bonds, and other assets. The “portfolio” refers to the particular stocks, bonds, and assets that the funds are invested in.
Exchange Traded Funds (ETFs): While ETFs and mutual funds both consist of a group of assets, ETFs are specifically created to track a certain index, industry, commodity, or another set of assets. As a result, you may have an ETF that tracks real estate or corporate bonds. You should invest in low-cost, well-diversified ETFs as a college student since they provide you access to hundreds of stocks without requiring you to individually examine each one.
Index Funds: An index fund is a similar thing to a collection of assets, but it is tied to an index, such as the Nifty 50 or the Sensex. One benefit of index funds is that they often have cheaper costs as no professional takes the time to choose stocks or bonds for the portfolio.
Bonds: A bond is, in the simplest sense, a loan from an investor to a borrower, such as a particular corporation. Bonds are an essential component of a balanced portfolio because they may lessen the impact of a decline in the stock market.
As you can see, there are several options for students to choose from. However, they require a significant amount of knowledge to get started. This is where Zebu School comes in. We have market experts who teach about the basics of the share market and help investors make the right financial decisions. Our courses are simple and pocket-friendly and can help you make the most out of the share market. To start learning today, please get in touch with us now.
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