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Investment Tips for Beginners Who Just Graduated College

Sep 28, 2018

Developing the habit of saving money from the initial years can prove to be a great decision in the long run. Students who have just graduated, look for sources of earning. Some take an internship to gain experience in their subject, while some start part-time jobs to earn extra money.

Converting these earnings into investments requires you to consider some essential pre-requisites. First among those is, concentrating on accumulating enough liquid cash to be able to carry out daily expenses smoothly.

One of the first things you would need to do to organize your finances, would be separating money into savings and daily budget. Newly graduated students have the option of saving for long-term goals such as traveling, and purchasing gadgets. 

Since they are more equipped to take risks, investing dummy money in virtual accounts could be a good start. Such accounts are provided by brokers which students can use to invest in real stocks.

How to Begin Investment?

Start with Exchange Traded Funds (ETFs)

Due to the myriad investment options available to graduates, it is easy for them to get carried away. ETFs are for trading various investing instruments across different companies and have equal amount of risks and gains. Since the minimum amount required to invest in ETFs is Rs. 2000, it is one of the easiest options for graduates who want to start investing.

Moving on to Fixed Deposits (FDs)

Once they have enough experience with investing in ETFs, they can start investing in Term Deposits (Fixed Deposits). FDs provided by NBFCs offer higher returns than the ones provided by banks. This is one of the safest options with almost no risks involved. 

It isn’t affected by market fluctuations and can work as an emergency fund. Moreover, you can choose the frequency of their interest payouts to keep the incoming flow of liquid cash. NBFCs like Bajaj Finance offer interest rate of 8.40% on Cumulative FDs and 7.88% on Non-Cumulative FDs, which can good way to generate effective returns. 

FDs can help you create a corpus over time, that can be used to fund your travel plans or even a professional course that you might want to pursue.

Additionally, you can also diversify your money by investing small amounts in different FDs. As a graduate, you might have financial goals that are short-term as well as long-term. Laddering your FDs can help you fulfill your long-term goals without compromising on the short-term ones.

Investing in Systematic Investment Plans (SIPs)

Another option that you can go for, is investing in SIPs. SIPs can earn you long-term benefits by investing as little as Rs. 5000. If you invest this amount for the next 25 years, you can easily collect around 50 Lakhs as returns. 

SIPs relieve students from the hassle of manually transferring funds, as the money directly gets transferred from their bank accounts. You can even plan and invest according to the period and your risk tolerance for 2-3 different priorities at different intervals.

Mutual Funds

Whether students are receiving stipends from parents or an internship – they can start micro-investing in mutual funds. Even if they earn very less, they can start investing in MFs with as little as Rs. 100. They offer high returns in the long-term. Investing for 15 years in MFs can fetch you a CAGR of 15%, and almost 18%, if you invest for 20 years.

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