It is just awesome that you want to invest at an early age. Investing online in mutual funds is quite easy and paperless.
Which Funds to Invest:
- Always invest in Direct Plans of Mutual Funds. They entail 0% commission which is a great deal. The 1.5% commission per year (actually calculated and incurred daily) adds upto 40% of TOTAL investment.
- Invest in Direct Plans of Equity Mutual Funds as these give you the best returns over long term. As a student you have time on your side.
- If you are willing to take higher risk go for a combination of multicap, mid cap or small cap funds. This is a complex topic, but can be simplified by taking a risk profile. There are tools which then recommend which funds to invest based on the risk profile. You can get a risk profile done here.
- Ensure that your investments map to an objective and horizon in addition to your risk appetite. An open ended objective (to build wealth) is just fine.
The Process:
- Signup at one of the online portals that aggregate direct mutual funds. I am with Jama.co.in and will recommend that, for the ease of use, best direct plan selection, goal planning and strong advisory capabilities.
- Once you signup, investing is easy. Choose from one of the fund categories, start your investment and complete your account opening (one-time activity that takes 2 to 3 minutes). Subsequent investments can be done in seconds.
- Starting a Systematic Investment Plan (SIP) is a smart way to invest as it automates your investments. You can simply tag your Aadhar linked bank account to the investment and funds get automatically get invested each month.
Tip: Being very young, you can also target a goal, by saying that you wish to be financially free by age 35 or age 40 (very much possible, by investing 40%-50% of your earnings).
The following pic shows how just ₹ 10k investment per month can get you about ₹ 7 crores over a career (assuming 15%). Same reduces by ₹ 2 crore when you invest via a broker/app/distributor/bank that does not offer you direct plans.
