YourMoneyWise logo YourMoneyWise

Best Investing App for Beginners: 5 Funds Gen Z Loves

Gen Z investors in India are reshaping fund flows. See the 5 funds winning them over, plus the tax traps to avoid before you start a SIP.

Gen Z Investing: 5 Funds Winning Over Young Indians — illustrative featured image
## The Rs 500 SIP That Beat a Hedge Fund A 23 year old product analyst in Bengaluru opened her brokerage app last March and put Rs 500 into a Nasdaq 100 index fund. Not because a wealth manager told her to. Because a fintech creator she follows on Instagram did a 40 second explainer on it. Six months later she added a mid cap fund. Then a gold ETF. Total monthly outflow: Rs 3,000. That pattern is repeating across India's metros and it is reshaping how fund houses think about product design. The same instinct is visible in London and New York, where Gen Z and younger millennials are skipping the "talk to an advisor" step entirely and going straight to an app. Our readers in the US, UK and Europe often ask why we keep writing about Indian fund flows. The answer is simple: India's retail investor base is growing faster than almost anywhere else, and the products winning there tend to show up in Western app storefronts 18 to 24 months later. If you want to know what the **best investing app for beginners** will look like in 2027, watch what Indian 25 year olds are downloading today. ## Why This Cohort Invests Differently Three things separate Gen Z investors from the generation before them. First, they start small and stay small for longer. A Rs 500 or $25 monthly contribution is normal. They are not waiting for a Rs 50,000 lump sum. Second, they want the thesis in one screen. If a fund fact sheet runs to six pages, they will not read it. If a 60 second video explains it, they will. Third, they care about what the fund holds. Tobacco, thermal coal, and controversial weapons screens matter to them in a way they did not to their parents. That last point is not just moral signalling. It changes flows. Funds with clean screens and simple stories are pulling in money that used to sit in fixed deposits. ### The tax angle nobody explains properly Here is where we part ways with most fintech marketing. In India, equity funds held under 12 months attract short term capital gains tax at 20 percent. Hold past 12 months and you pay 12.5 percent on gains above Rs 1.25 lakh a year. Debt funds are taxed at your slab rate regardless of holding period. For US readers, the equivalent trap is wash sale rules and the 60/40 split on futures based ETFs. For UK readers, it is the ISA wrapper and the £3,000 capital gains allowance. The point: a fund can be brilliant and still be the wrong choice if you sell it at month eleven. Gen Z investors trade less than the stereotype suggests, but the ones who do trade get burned by this. ## The Five Funds Getting the Attention We are not ranking these. We are explaining why each one keeps appearing in the same conversations. | Fund type | Why it appeals | Watch out for | |---|---|---| | Nasdaq 100 index fund | One line thesis: own the biggest US tech names | Currency risk if rupee strengthens | | Nifty 50 index fund | Lowest cost, easiest to explain | Feels boring, so people abandon it | | Mid cap active fund | Higher return potential, good story | 30 to 40 percent drawdowns are normal | | Gold ETF or fund of fund | Hedge against equity falls | No dividend, no income | | Balanced advantage fund | Auto adjusts equity and debt | Fees are higher than pure index | ### Nasdaq 100 index funds The pitch is clean. You own Apple, Microsoft, Nvidia, [Amazon](https://www.amazon.com/). No fund manager guessing. Expense ratios in India run 0.20 to 0.50 percent for the feeder versions. The catch is currency. If you earn in rupees and the rupee appreciates against the dollar, your returns shrink. Most young investors ignore this until it happens. ### Nifty 50 index funds This is the fund we recommend to almost every beginner. Expense ratios have fallen to 0.10 to 0.20 percent. It holds the 50 largest listed Indian companies. You can explain it to your father in one sentence. The problem is behavioural. It is so simple that people get bored and switch to something more exciting after four months. ### Mid cap active funds This is where the real money has been made in India over the last decade. Mid cap funds have delivered higher returns than large cap over most rolling ten year periods. They have also fallen 40 percent in bad years. Twice since 2018. If you cannot stomach that, do not buy one. ### Gold ETFs and fund of funds Gold has been the quiet winner. It does not pay interest or dividends, which is exactly why it works as a hedge. When equities fall, gold often does not. Young investors like it because it is simple and tangible. You are not buying a story about future earnings. You are buying metal. ### Balanced advantage funds These funds shift between equity and debt based on valuation models. In theory, they smooth the ride. In practice, they charge 0.8 to 1.2 percent and often underperform a simple 60/40 split you could do yourself. We are lukewarm on these for beginners. They solve a problem that a two fund portfolio already solves. ## Our Take: What We Would Actually Do If a 24 year old earning Rs 60,000 a month asked us where to start, here is what we would say. Open an account with Zerodha Coin or Groww. Both let you start a [monthly SIP](/finance/blog/how-to-start-a-systematic-investment-plan-sip-in-mutual-funds-a-beginner-s-guide) in direct plans with no commission. If you are outside India, Vanguard and Fidelity's app experience is fine for index funds, and Trading 212 or Invest Engine work for UK readers who want fractional shares. Then split your monthly amount like this: - 60 percent into a Nifty 50 or S&P 500 index fund - 25 percent into one mid cap fund (Parag Parikh Flexi Cap or Mirae Asset Emerging Bluechip are the two most discussed) - 15 percent into a gold ETF Do not add a fourth fund until you have run this for 18 months without touching it. The **best investing app for beginners** is the one you will actually open every month. That sounds like a cop out. It is not. The single biggest predictor of whether a young investor builds wealth is whether they keep the SIP running through a bad quarter. Apps that gamify streaks and send gentle nudges do better on this than apps with better research. ## What Beginners Should Steal From Gen Z Three habits worth copying, regardless of where you live. **Start with an amount that feels too small.** Rs 500 or $25. The habit matters more than the amount in year one. **Write down your reason in one sentence.** If you cannot, you do not understand what you bought. **Check your portfolio once a month, not once a day.** Daily checking correlates with worse returns. This is well documented. The Gen Z approach is not reckless. It is just impatient with complexity. That is a feature, not a bug. ## FAQ ### Is a Nifty 50 index fund enough for a beginner? For the first two years, yes. One low cost index fund held consistently will beat most three fund portfolios that get switched around every few months. Add a mid cap fund only after you have held the index fund for at least a year. ### How much tax will I pay if I sell my equity fund after 8 months? In India, short term capital gains on equity funds are taxed at 20 percent regardless of your income slab. Wait past 12 months and the rate drops to 12.5 percent on gains above Rs 1.25 lakh. The difference is large enough that timing your exit matters more than picking the perfect fund. ### Do I need a financial advisor if I am under 30? Not necessarily. If your portfolio is under Rs 10 lakh and you are only holding index funds, a fee only advisor will usually tell you the same thing this article does. Consider one once you cross Rs 25 lakh or start mixing in sector funds and international exposure.

Frequently asked questions

The tax angle nobody explains properly Here is where we part ways with most fintech marketing. In India, equity funds held under 12 months attract short term capital gains tax at 20 percent. Hold pa

For the first two years, yes. One low cost index fund held consistently will beat most three fund portfolios that get switched around every few months. Add a mid cap fund only after you have held the index fund for at least a year.

How much tax will I pay if I sell my equity fund after 8 months?

In India, short term capital gains on equity funds are taxed at 20 percent regardless of your income slab. Wait past 12 months and the rate drops to 12.5 percent on gains above Rs 1.25 lakh. The difference is large enough that timing your exit matters more than picking the perfect fund.

Do I need a financial advisor if I am under 30?

Not necessarily. If your portfolio is under Rs 10 lakh and you are only holding index funds, a fee only advisor will usually tell you the same thing this article does. Consider one once you cross Rs 25 lakh or start mixing in sector funds and international exposure.

Related articles