One kind of youngsters, who are in their 20s and working on basis of salaries, must not be so much worried about investments. But the other type of individuals who are in their 20s and quite conscious about compounding must be planning for getting into investments. It can be decided easily if one can figure out the major elements like how much can be saved, what are the expenses, the income and the debts.

People often confuse investment with savings. Both are different terms. Saving refers to that money which is kept aside like in bank savings account, but investments refer to looking for other financial instruments which will pay a return in future. Money in savings can never grow, but in investments the funds grow with time.

It is important to make prior planning of everything in accordance to time span we have. Just like this, here are some financial instruments which can be given a view by young investors. Again, investments are based on tax applicability, returns, the risk etc.

• Emergency Fund

Emergency funds refer to those funds that are set aside and can be used in the events of personal financial issues, like a job loss, illness or major expense. These can be kept in bank fixed deposits or liquid funds. This fund helps the individual to manage finances without breaking any long term investment. A safety net fund that can be used in emergency to reduce the need to borrow high interest debt or unsecured loans in cases of dilemma, this is what an emergency fund is all about.

• Health Cover

Health insurance is the coverage that pays for major or minor medical expenses of the insured individual. Health cover options are often included in Employer Benefit Packages in various workplaces. So one can either check with his/her employer about health cover, the amount sufficient and how many member does it covers. If it doesn’t fits the needs, one must get a health policy soon.

• Equity Mutual Funds

As the name suggest, equity mutual funds are those kinds of mutual funds that comprises mostly of the equities. These can be considered from medium to long term investments, if one is looking for better returns. These mutual funds give better returns than any bank fixed deposits that are used for long term investments.

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• Investments in Stock

Investing in stocks is never an early decision. This is the proper age to learn and start investing in equities. Stocks are a security that signifies an ownership in a corporation’s assets and earnings. Stocks or equities are an option in which one can start from a low amount and later can increase the amount to invest. These are believed to give better returns in comparison to other instruments in investments.

• Tax Saving Instruments

Tax saving instruments as they say by the name, are those investment options that allow the investor to save tax and earn returns on the same. There are different kind of tax saving investments like ELSS, ULIP, VPF and PPF and much other tax saving fixed deposits. These are planned on the basis of returns.

• SIP (Systematic Investment Plans)

Systematic Investment Plan or SIP are those smart mode of investment which allows the investor to invest pre-determined amounts on any interval like weekly, monthly, quarterly etc. This is mainly a habit to save and build wealth for future. It works just like Recurring Fixed Deposits but in these one invests in mutual funds through equities or debts.