It’s possible that most people who just got their first job or just turned working age (Fresh Graduates) have full-time employment with very steady compensation. There is a low chance of losing their job or being unemployed.
Nonetheless, fresh graduates may have a low return. Therefore, most of them may try to find investment opportunities to gain more money with passive income. However, what is the recommended investment for fresh graduates? This article has the answer.
List of contents
- The recommended investment for the fresh graduates
- Investing in assets that provide a “Tax-Advantaged” or “Tax Deduction.”
The recommended investment for fresh graduates
Fresh Graduates’ Investment: “Low Risk” Work, “High Risk” Investing
The benefit of having a stable income for fresh graduates is that it provides a certain level of stability, including working hours, work patterns, and salary. However, when their occupations are low-risk, they are newbies who are able to make mistakes and learn from them. Therefore, they may accept a few mistakes. Consequently, they might emphasize high-risk investments such as stock purchases, equity fund ETFs, cryptocurrency, foreign exchange, and additional assets such as gold. However, there are some mutual funds, ETFs, and other investments with a medium risk profile for fresh graduates who can accept less risk.
If fresh graduates work in a low-risk environment and invest in low-risk assets, their salaries and investment returns may be lower than inflation. It would be best if fresh graduates thus considered investing in assets with moderate to high risk.
Fresh Graduates’ Investment: Investing in assets that provide a “Tax-Advantaged” or “Tax Deduction.”
When fresh graduates reach work age, the tax will follow their salary. So, they should consider tax-deductible contributions when selecting investment assets. However, each country’s tax-deductible rules are distinct. Nonetheless, mutual funds in a few nations might give tax advantages, which are;
The Equity Linked Savings Scheme (ELSS)
The Equity Linked Savings Scheme (ELSS), also known as the Tax Saving Mutual Scheme or India’s Tax Saving Mutual Funds, is equity-linked. The only mutual fund qualifies for a tax deduction under Section 80C of the Income Tax Act 1961. This act allows you to claim a tax refund of up to $20,000. Moreover, the inventors can claim a tax savings of up to $600 annually by investing in ELSS funds.
Health Savings Accounts (HSA) and High Deductible Health Plans (HDHP)
Health Savings Accounts (HSA) and High Deductible Health Plans (HDHP) are high-deductible health insurance plans that have been implemented in the United States since 2003. Contributions to the account are exempt from taxation, which is one of the HSA’s benefits. (subtracted from your earnings).
These investments are helpful for fresh graduates who are just starting and have limited income, expertise, and money. Nevertheless, if you have more funds with additional knowledge and experience, you may alter your strategy as well as assets for further investment.
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Source: Cleartax, Economic Times, Forbes, Groww, Young and the invested