5 Best Investment Options for Millennials for Financial Freedom in 2020

Mayur Pirgal & Kanchan Dwivedi

Design Credits: Vecteezy.com

Today on the eve of 74th Indian Independence Day, we would like to share the benefits of having financial freedom & investing for a secure future. A majority of the millennials would not have thought about saving for the long term, maybe before COVID-19 struck the nation and the world. The economy was called the Gig-Economy, and was about how the current generation lives for the experiences. This mindset was evident in the purchase choices she/he made by opting for co-living, renting homes, renting furniture, fridges, A/Cs, scooters, sharing taxis, ordering food online, opting to stay in AirBnBs and Oyo Homestays rather than in hotels, within India and abroad to rejuvenate themselves and for fun experiences. It was clear that the Millennials did not have a penchant to save for later years as the Baby Boomers or a Generation X would have tended to, but their decisions were more oriented towards unique experiences.

Well, going by the way the economy, society & businesses have been negatively impacted because of Corona Virus, it is a time to seriously think towards investing for a secure future. The good news is that, it is possible to adopt a golden middle where you can enjoy your lives & simultaneously make sure that you do not compromise your future. Towards that, we bring to your attention the top best investment options a millennial can consider in 2020, below.

1.Mutual Funds: The basic concept of mutual funds is that it that pools money from a number of investors (you and others like you) and invests the money in a variety of securities such as stocks, bonds, long-term debt, etc. This combined holding is known as the portfolio of a mutual fund. And when you invest in a mutual fund, you effectively buy a share in the portfolio, making you a part owner of the income that the mutual fund generates.

Though, the mutual funds industry has received a battering in the recent times due to poor equity performance, competition from portfolio management system as well as stock brokers, and a weak distribution network comprising of only 1 Lakh mutual fund distributors ( compare that figure to 20 Lakh insurance agents in the country), it still remains an investment option where one can get a return of upwards of 8% on Large cap funds and 9-11 % on Mid-Cap and Small-Cap funds.

Like most of the investment options, even mutual funds are subject to market risks (fluctuations in the market). There are also exit fees to be considered when redeeming mutual fund units , that vary anywhere from 0.25% -4 %.

Advantages of investment in Mutual Funds:

  • The mutual funds are managed by finance experts and professionals who perform all the research, select the securities and monitor the performance.

  • Investment in Equity Linked Savings Scheme (ELSS) allows the investor, tax savings of upto 1.5 lakh in a financial year under Section 80 C.

  • Allows the investor access to diversified securities for an amount as low as Rs. 100.

  • Redemption