Do you want to start investing but don’t have a fat bank account to begin with? Honestly, the size of your bank account doesn’t matter! You can begin investing even when you are tight on the budget. Want to know how? Let’s dive in right away.
Begin Small, Build Big – 12 Tips to Invest with Little Money!
So, what if you do not have big sums to invest? The Indian economy is mature enough to provide you with options with which you can begin small. Here’s how you can do it.
1. Systematic Investment Plan (SIP) in Mutual Funds
SIP has emerged as a popular investment option in recent years – thanks to the several ads we see these days. It involves investing in mutual funds by contributing a fixed amount regularly and building wealth over a period.
You can begin with just Rs. 500, invest consistently, and benefit from regular investing, compounding, and dollar-cost averaging. Dollar-cost averaging involves investing a fixed amount of money regularly, regardless of market conditions, buying more shares when prices are low and fewer when prices are high.
Worried about how SIP helps in Mutual Funds, why to wait read our blog on “ The Power of SIP: Why It’s the Best Way to Invest in Mutual Funds?” to know more about it?
2. Use Discount Brokers and Online Platforms
Earlier, investments were restricted to big players with access to the market. However, the digital revolution changed things. Today, every individual with a mobile phone and internet connection can invest through online platforms.
You can open a Demat and trading account with Upstox, Groww, or Zerodha and begin investing. These have low fees and minimum balance requirements.
3. Invest in Index Funds or ETFs
When you start small, you must look for funds that support your modest beginning.
Accordingly, you can invest in low-cost index funds or exchange-traded funds that track market indices like Nifty or Sensex. Low-cost index funds are a cost-effective way of investing your money in different types of stocks and bonds. Thus, these funds provide diversified exposure to the stock market with minimal capital. Want to discover more about these funds? Joining our best stock market classes in Pune will help you explore and understand them better!
Don’t know what you mean by invest in Index Funds or ETFs then we have it covered for you. Read our blog on “Investing in Index Funds and ETFs: A Passive Approach to Wealth Building” and get to know more about it.
4. Diversify with Low-Cost Mutual Funds
Diversification applies in every situation, no matter your investment amount.
Thus, you must consider investing in equity mutual funds to achieve a broader market exposure and minimize your investment risk. Such mutual funds require a lower initial investment than that required while buying individual stocks.
5. Leverage Tax-Saving Instruments
Tax is an important factor to consider while investing in the stock market. This is because the income you earn from investments is usually taxable. However, you can explore tax-saving investment instruments like the Equity-Linked Savings Schemes (ELSS) that have a considerable growth scope and offer tax benefits under Section 80C of the Income Tax Act.
Wondering what ELSS is? It is an equity-linked scheme, a mutual fund class that offers a tax rebate of up to Rs. 1,50,000. The scheme has a lock-in period of three years and involves allocating nearly 65 percent of the funds towards equity and equity-linked securities like listed shares.
6. Participate in Initial Public Offerings (IPOs)
While beginning with a small amount, you can consider participating in IPOs. IPOs refer to companies selling shares to the public for the first time. Such companies raise public capital to support business expansion, make large purchases, drive investments, etc. However, before participating in an IPO, you must research the company, examine its growth potential, and apply for shares at the offering price.
Enroll in our stock market courses in Pune to learn how to analyze an IPO and determine if it is worth investing your money in it.
7. Invest in Fixed Income Securities (Bonds)
Bonds are yet another investment option when you begin small. They do not offer high or exciting returns. However, they can help you build wealth in the long run with stable and predictable returns. You can consider exploring government, corporate, and tax-free bonds.
8. Invest in NPS (National Pension System)
NPS is a long-term retirement-focused investment scheme with tax benefits and low minimum contribution. The scheme allows you to begin investing with as much as only Rs. 500 in equity and debt options.
9. Invest Through a Public Provident Fund (PPF)
PPF is something we’ve all heard of. It also is a long-term savings instrument with tax-free returns and a minimum investment of only Rs. 500 per year. The scheme is known for its safe returns and tax benefits under Section 80C.
10. Start with a Small Emergency Fund
Here’s a conventional tip for beginners with a small amount. Remember, every investment option carries a certain amount of risk. It varies with the nature of the fund or the option and its relation with the market.
Thus, before you invest your money, you must build an emergency fund and keep it aside in your savings account to be on the safe side. In case you can’t earn the expected returns or incur losses, you will have some amount to support yourself financially.
11. Focus on Long-Term Growth and Patience
Market investment involves several ups and downs. Thus, you must be prepared for short-term market fluctuations. While investing, you must look at the larger picture and ensure you invest consistently in different types of instruments instead of timing the market.
12. Monitor and Review Your Portfolio
Additionally, you should check your investment portfolio regularly and rebalance if required. No matter how small your investment is, you must review your investment periodically and make changes to your portfolio, aligning it with your financial goals.
Prepared to Begin Investing?
Before you start investing, we recommend making an informed entry into the stock market. Our stock market courses in Pune can prove to be a good starting point!
Our comprehensive courses, expert guidance, and practical training help you become a confident investor capable of making independent decisions. Thousands of students have already benefitted from our courses and investing successfully. Call us at +91 7068001919 if you want to be one of them!