Best 7 Retirement Investment Options for People in their 20s

People who are in their 20s can look for the best retirement investment options for themselves, considering it is done for the long term. The best investment option would typically consist of a mix and a diversified portfolio.

Here are some options that a person can consider:

Equity Mutual Fund: Investing in mutual funds can be prominent as it invests in stocks, which can provide a high return over a long period of time. A person can also start with an SIP (systematic investment plan), which allows them to invest on a regular basis in equity mutual funds.

Public Provident Fund (PPF): A public provident fund is a government-backed retirement scheme that also offers tax benefits under Section 80C of the Income Tax Act. Though the only drawback is that it has a lock period of 15 years, it provides a guaranteed return along with tax-free interest.

Employee Provident Fund (EPF): The employee provident fund is a retirement scheme that is available to salaried employees. Here, a portion is deducted from the salary of the employee and contributed to the EPF account. The employer also contributes to this fund. EPF comes with benefits, such as tax benefits and a fixed interest rate.

National Pension System (NPS): The national pension system is a long-term savings scheme that is regulated by the Pension Fund Regulatory and Development Authority (PFRDA). It is a voluntary scheme that offers a choice of investment options and pension fund managers. It also provides tax benefits under Section 80CCD (1B).

Direct Equity Investment: People who have an appetite for risk and have good knowledge about the stock market, stocks, and how the market works can invest directly in the stocks, as it can potentially offer them a higher return. However, investing directly in stocks requires thorough research, technical knowledge, and a good understanding of the stock market; if not, the person can lose all of his or her funds.

Real Estate: Real estate investment is also considered diversified investing, where a person buys properties that can offer a high return after a period of time. However, real estate investing requires huge capital and also involves additional costs like maintenance and taxes.

Debt Instruments: It is advised to have a portion of your portfolio allocated to debt instruments such as fixed deposits, bonds, etc. It is done so that there can be found stability and minimal risk.

It is crucial to have a diverse portfolio that aligns with a person’s risk tolerance capability, investment goals, and how long they can invest. A regular review of the portfolio should be done so that a person can rebalance his or her portfolio and make sure that his or her financial goals and risk tolerance are aligned. Seeking advice from a financial advisor can also provide good guidance that is personalized based on the individual’s circumstances and goals.