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How To Invest In Stock Market With Little Money?

IndianMoney.com Research Team | Updated On Monday, August 06,2018, 07:32 PM

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How To Invest In Stock Market With Little Money?

 

 

You don’t need a lump sum to invest in the stock market. Investing small amounts regularly can also reap big rewards. It is foolishness not to invest, just because you don’t have a lot of money. Investment can be done with small amounts in a disciplined manner. You can start investing with an amount as less as Rs 500.

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How To Invest In Stock Market With Little Money?

Wealth creation takes time, effort and discipline. Start investing now to enjoy a strong financial future. These are the ways to invest in the stock market with little money:

See Also: Stock Exchanges In India

1. Cookie jar approach:

Saving and investing are closely connected. You cannot invest without saving money. Saving money will actually take less time than you think. You can set aside money each day or week. Try setting aside Rs 100 a week. This may not seem a lot of money, but over the course of a year, it comes to over Rs 4,800.

Put this amount in a cookie jar. Spend less than you earn. The sky won’t fall down, if you don’t watch a movie this month. Put away the ticket money in a safe place. You can even save money in a savings bank account, which has no Debit Card, so that you can’t withdraw this money. When you have a lump sum, withdraw the money and make a smart investment.

2. Make up for the misses:

Investing requires commitment. You need to be regular and consistent when it comes to savings. Say, you couldn’t save the stipulated amount this week. Make up for it. Skip gong for a movie the next weekend.

3. Invest in mutual funds through SIPs:

Mutual Funds are long-term investments, which help grow your money. You can invest an amount as small as Rs 500 a month via SIPs in mutual funds. SIP stands for Systematic Investment Plan. Through SIP, a pre-determined amount is deployed in mutual funds at regular intervals (weekly, monthly, and so on).

See also: What is Primary Market?

4. Invest in more than just savings bank accounts:

Savings bank accounts offer only 4% interest a year. So, find other investment options which give you higher returns. Even if you are just parking your money, invest in some financial instruments which give better returns than the SB account. You can invest in liquid funds. They give higher returns and are very liquid.

5. Practice with apps:

Paper trade is where you can practice investing in the stock market without using real money. The stock market is highly volatile. So, even a single wrong move in investment can eat up all your money. Therefore, make the best use of such apps and document the learning so that you can use it in real investments.

6. Equity SIP:

Just like mutual funds, you can also start with Equity SIPs. Also known as ESIP, Equity SIPs help you in spreading out investments over a period of time. Thus, you can benefit from rupee cost averaging. In this way, you can create a corpus with small investments.

7. Keep emotions away from investment decisions:

True, you are bound to be overwhelmed when you first start investing in the stock market. Chances are emotions might hamper investment decisions. Earning good returns gives you a thrill, but losing money hurts. If you lose today, you will surely win tomorrow. Just remember, protect your capital! Don’t let it erode.

8. Be realistic:

Do not invest with expectations of earning quick returns. Even experts take measured steps when it comes to investing in stocks. So, be patient and learn while you earn.

9. Invest surplus funds:

Increase the quantum of investment, if you have a windfall gain or get an annual bonus. Invest the surplus. Windfall gains are rare. You might be tempted to blow it up on entertainment. While you deserve entertainment, it is wise to invest most of your surplus.

10. Do not imitate celebrity investors:

Behind each move of celebrity investors is expert advice. Maybe the celebrity had bought shares long back when they were doing well. This means its late news. No celebrity reveals all their secrets. They do not disclose important strategies relating to entry and exits in stocks. Therefore, don’t gamble with your hard-earned money. Even if you have started learning on the stock market, remember you still have a long way to go. Half knowledge is dangerous.

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IndianMoney.com Research Team

The research team at IndianMoney.com comprises of certified and experienced professionals who share the company's vision to make every Indian financially literate by equipping every Indian with right and unbiased advice. IndianMoney.com research team provides newsletters, articles, videos and FAQs on various financial products and concepts only to help you make wise financial decisions.

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