Starting to Invest as a Student

You don’t need a lot of money to start investing. What students have that older people don’t is time, and time is the most powerful ingredient in investing.

The power of starting early

Suppose two people invest in a fund earning 10 percent a year:

• Asha invests 1,000 rupees a month from age 18 to 28, then stops, but leaves the money invested until 60.
• Rahul starts at 28, investing 1,000 rupees a month until 60.

Although Rahul invests for 32 years and Asha for only 10, Asha ends up with more money at 60 - roughly 50 lakh rupees against about 28 lakh - because her early investments had more time to compound.

Getting started

• Emergency fund first: keep some savings accessible.
• Learn the basics: risk, return, diversification and costs.
• Start small: many mutual funds allow SIPs from as little as a few hundred rupees a month.
• Choose simple, diversified funds, such as index funds.
• Minors can invest in mutual funds through accounts managed by a parent or guardian.

Avoid common mistakes

• Trading frequently or in futures and options, where most individual traders lose money.
• Following tips from social media.
• Investing money you’ll need soon in risky assets.

Keep learning

• Read about personal finance from reliable sources.
• Understand fees and expense ratios.
• Track your investments, but don’t check them daily.

Beyond money

Investing in skills and education often gives the highest returns for young people. Balance financial investing with learning.