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.Read more
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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.
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.
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.
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.
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.
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.
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.
Upon selecting a plan, a student may evaluate the past year's returns of the particular plan to proceed with the investment.
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.
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.
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.
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.
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.
Past 10 Year annualised returns as on 01-11-2023
^Tax benefit are for Investments made up to Rs.2.5 L/ yr and are subject to change as per 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
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