Best Investment Plan for Students

People are dependent on different sources of income for wealth creation. However, when it comes to investments, the market in India has opened multiple options for an individual to make investments and earn good returns. Even students may embark on a financial adventure to earn high returns on their investments. Various small investment plans for students have opened all across the financial instruments.

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SIP Plans for Students

Financial awareness has started gaining massive importance among the masses. People have realized how crucial it is to start investing early to have a backup for the future. Students pursuing law and management can better comprehend the importance of saving and investment. However, when it comes to making investments, people get stuck in the common misconception of the requirement of a significant amount to make investments. For example, a common individual feels one needs to get a highly paid job to participate in the investment-making process.

On top of that, when they hear about Mutual funds, they hardly find themselves eligible to become an investor in MFs market. However, it is only the case with some schemes of the mutual fund. The MF offers several small investment plans for students or investors, which require a short sum amount to invest regularly. Moreover, SIP is the best investment plan for students if they wish to start investing while pursuing a college degree.

Nowadays, many students are indulged in part-time jobs or freelancing while pursuing a degree. Some also get significant pocket money from their parents on a monthly basis. They may utilize their money by investing in SIPs, the best investment plan for students.

How to Start with Best SIP Plans for Students

The commencement of the investment process with SIPs is straightforward. The investor is not required to visit the offices of mutual funds to start the investment process. Listed below are the methods to start with SIP, the best investment options for the student.

  1. PAN card

    A student needs to have a pan card to begin the investment in SIP. The PAN card is imperative for every type of investment. Hence, without a PAN card, a student cannot start the investment process in SIPs.

  2. KYC process

    In order to avail of small investment plans for students, the investor is required to proceed through the KYC process. The student needs to verify the KYC at the nearest bank or mutual fund office by submitting the address proof, identity proof, and PAN card.

    Upon completion of the KYC process, an investor may start investing in a mutual fund scheme from a fund house. However, the registration process is not ended here. Additional registration is required to get oneself registered under SIP.

    • In order to register for SIP, an investor may visit the mutual fund office, a financial broker, or AMC (Asset Management Company), where the investor must fill out a form provided by the company. The investor needs to fill in the required details correctly for registration.

    • Upon submission of forms with the necessary documents, the investor will be given an ID and password to make transactions online. At this time, the investor may decide the investment amount he wishes to invest in SIP.

    • Upon registering, the investor may provide bank account details to get the amount automatically debited every month. The investor may select the SIP plan he wishes to enroll in. 

How SIPs are Best Investment Plans for Students

SIPs can be considered as the best investment plans for students. But, more importantly, it is at the discretion of students to initiate, pause or terminate their accounts if they are running out of money or facing financial difficulties in paying the premium at regular intervals.

Below are the parameters a student may assess to analyze how SIPs are the best investment plans for students.

  1. Risk

    Every investment plan possesses a risk. However, the risk is comparatively low when it comes to small investment plans for students. In addition, one may notice how risk and returns in SIPs are proportional. Hence, a student may pick any category of funds on the basis of risk tolerance.

  2. History of AMC

    Before selecting a plan, the student may check AMC's history and the fund manager's profile to analyze the profit and loss he may face in a specific plan.

  3. Evaluation of returns

    Upon selecting a plan, a student may evaluate the past year's returns of the particular plan to proceed with the investment.

Best SIP Plans for Students

  1. Kotak Emerging Equity 

    The Kotak Emerging Equity is considered the best SIP plan for students when one measures the last ten year's records. Kotak Emerging Equity has provided 6.73% returns in the past five years on average. In addition, the investors have received 12.03% equity in the last ten years. 

  2. DSP Midcap

    The DSP Midcap is an excellent route for small investment plans for students. It has provided good returns on investment in the last ten years. The investors have received 12.65% returns on their investments. 

  3. SBI Small Cap

    The SBI Small Cap is an excellent small investment plan for students. In the previous ten years, the company has offered 16.57% returns on the investment made by investors. In addition, the company has provided a 20.92% return in the last seven years. 

ULIP Investment Plan for Students

Apart from SIPs, students may also consider ULIP (Unit Linked Insurance Plan) to invest their funds in. It offers dual benefits in a single premium. The first part of the premium provides an opportunity to invest in the capital market. At the same time, the other part of the fund offers life insurance coverage. In addition, the student will get three types of funds to invest in the money market. They are equity, debts, and hybrid form of investment. In the first instrument, the student with a high-risk appetite may invest in equity and generate a significant return. In the debt instrument, the student may invest their funds to reduce the risk and earn a reasonable return. Finally, in the hybrid form of the fund, they may balance the risk and returns on the investment. Hence, ULIP is the best small investment plan for students.

Conclusion

Mutual funds provide small investment plans for students under the SIPs. Therefore, one may select the best category of SIP and choose the suitable scheme to make investments. However, it is advisable for students to invest in mid and small-cap companies which can grow faster in the upcoming years. In addition, the students should also consider ULIP and other investment plans to invest their funds.

FAQ's

  • What are the best investment plans for students? 

    In the financial world, a student can find various investment plans dedicated to small investment plans for students. However, when it comes to best investment plans, a student may invest their money under SIPs which ensure maximum profits.
  • How can one stop the SIP? 

    In order to stop the SIP, an investor may visit the branch, fill out, and submit the 'STOP-SIP' form.
  • Under which section can I avail of tax benefits under ULIP (small investment plan for students)?

    A student under section 80C of the Income Tax Act, 1961 can avail of tax benefits on the premium he pays during a financial year. 
  • Can I avail of tax benefits on the amount I get on the maturity of the ULIP plan?

    Under section 10 (10D) of the Income Tax Act, 1961, the tax benefits can be availed on the maturity amount.
  • Why is ULIP the best small investment plan for students?

    It offers dual benefits at a small premium amount. Hence, it is the best small investment plan for students.

Past 5 Year annualised returns as on 01-04-2024

^The tax benefits under Section 80C allow a deduction of up to ₹1.5 lakhs from the taxable income per year and 10(10D) tax benefits are for investments made up to ₹2.5 Lakhs/ year for policies bought after 1 Feb 2021. Tax benefits and savings are subject to changes in tax laws.

*All savings are provided by the insurer as per the IRDAI approved insurance plan.

Tax benefit is subject to changes in tax laws. Standard T&C Apply
~Source - Google Review Rating available on:- http://bit.ly/3J20bXZ

^^The information relating to mutual funds presented in this article is for educational purpose only and is not meant for sale. Investment is subject to market risks and the risk is borne by the investor. Please consult your financial advisor before planning your investments.

#The lumpsum benefit is calculated if policyholder invested ₹10000 monthly for 10 years in the fund with a policy term of 20 years. This Point To Point past performance data of last 10 years has been used to illustrate a scenario for the customers benefit. It is assumed that the past 10 years returns would have also been delivered in last 20 years. This is not guaranteed and not in anyway indicative of what the customer may actually get 20 years from now. The investment is subject to market risk and the risk is borne by the policyholder.

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