How should a 23-year-old start investing?
This is the age when a person starts earning and wonders how to invest. Hence the age 23.
Build a Strong Financial Foundation: Start by educating yourself on personal finance. Read books on personal finance, investor behaviour and of course books like ‘Random walk on Wall Street’ if you are going to invest in direct equities. Also, involve your parents teach them about equity so that they don’t ask you to withdraw all the money in a down market!
Also, follow resources from SEBI (Securities and Exchange Board of India) and keep looking for good You Tube videos courses on investing.
Track your income and expenses using a simple budgeting app or Excel. Aim to live below your means—save at least 20-30% of your income right from your first salary.
Create an Emergency Fund: Save 3-6 months' worth of living expenses in a liquid, low-risk account. Use a savings account or liquid mutual funds for easy access. This acts as a safety net for unexpected events like job loss or medical emergencies.
Pay Off High-Interest Debt:If you have education loans, credit card debt, or personal loans, prioritize paying them off. In India, student loans often have lower interest (around 8-10%), but credit cards can charge 36-40% annually—tackle those first to avoid wealth erosion.
Start Investing Early: Leverage the power of compounding. Begin with systematic investment plans (SIPs) in mutual funds—aim for equity funds if you have a high-risk tolerance. If you are well trained in finance, you can even look at direct equity.
Contribute to tax-saving instruments under Section 80C: EPF (Employee Provident Fund) if salaried, PPF (Public Provident Fund) for safe returns (around 7% as of 2026), or ELSS (Equity Linked Savings Schemes) for stock market exposure with tax benefits up to ₹1.5 lakh.
Diversify: Allocate 60-70% to equities (stocks/mutual funds), 20-30% to debt (fixed deposits, bonds), and a small portion to gold via ETF. From a taxation point of view it may make sense to invest in Multi-Asset funds.
Increase Your Earning Potential: Invest in skills: Pursue certifications or side hustles relevant to your field (e.g., coding bootcamps if in IT, or freelance writing). Aim to increase your income by 10-20% annually through promotions or job switches.
Consider gig economy platforms for looking for part time work and work hard on that.
Protect Yourself and Your Assets: Get health insurance early (e.g., via government schemes like Ayushman Bharat or private plans) to avoid out-of-pocket expenses. Term life insurance is crucial if you have dependents—opt for pure term plans with coverage 10-15 times your annual income.
Review and adjust your portfolio annually but avoid frequent trading to minimize taxes (long-term capital gains tax is 12.5% on equities held over a year as of 2026).
Adopt a Long-Term Mindset:Stay disciplined: Avoid get-rich-quick schemes, speculative crypto trading, or unnecessary lifestyle inflation.
Set goals: Use the 50/30/20 rule (50% needs, 30% wants, 20% savings/investments) and track progress quarterly.
At 23, time is your biggest asset—consistent small investments can grow significantly over 30-40 years of contribution, and then say a 30 year withdrawal.
Remember, wealth creation is a marathon. Consult a financial planner for personalized advice, especially for tax planning under Indian laws. Start small, stay consistent, and adjust as your income grows.