Investing allows your money to grow when you are busy with other tasks in your life. And thanks to an online Demat account and trading account, you can start investing from anywhere anytime in the stock market even if you have a small amount of fund. You can buy/sell even a single share online. Here are some ways to make an investment with little money. Before choosing an investment drive, how to start investing.
- Firstly, define the goals you want to achieve. Once you are ready with your detailed financial planning, you are also able to know what your commitments towards the investments are.
- Secondly, identify how much risk you can take. Take an honest look at your financial status before taking the risk.
- Determine how long you want to remain invested. If you are comfortable with a longer investment horizon, you can earn significant returns in the long run. Long-term investments have the capability to minimize investment risks. Thus, it is recommended to invest in the long term for better returns.
It will help you to choose the right investment avenue and make investment decisions easy.
1. Low-priced stocks:
Look at companies that have low stock values. These can be lucrative mid or small-cap stocks that can be bought with lesser investment.
2. No-load funds (in Mutual Funds):
These are mutual funds that do not levy additional charges because the shares are circulated/sold directly by the investment company, and there is no involvement of an intermediary party. The absence of commission makes it easy for beginners to invest their small amount of money.
3. Exchange-Traded Funds (ETFs):
Small-cap exchange-traded funds (ETFs) can be suitable for beginners in the stock market. Small-cap ETFs are the basket of small-cap stocks. You get the benefit of diversification since an ETF accompanies multiple asset classes. Unlike a mutual fund, ETFs trade like stocks. It is beneficial if you keep your investment for a longer time. because you have to pay a trading commission while trading in ETFs, so frequent trading will lead to a high commission.
4. Use Online Brokers and Investing Apps:
It is a great way to start investing with small funds. You can create an automatic investment plan with the help of online discount brokers. They charge a nominal amount while buying and selling shares. When you open an online Demat account with a brokerage firm, you should ask what all services will be provided by them. Demat account opening charges are nil with most brokerage firms.
5.. Traditional investments:
If you are looking for a traditional investment and your financial status does not allow you to take the risk, you can opt for a recurring deposit with the post office or the bank. It is a good avenue for beginners with limited funds to invest on monthly basis, starting with Rs.100 only. You can consider KVP (Kisan Vikas Patra) also.
A small case is a collection of stocks or ETFs that tracks a theme or strategy. Different stockbrokers offer their own collection of small cases. The small case gives the benefit of diversification as well as the opportunity to start investing with a smaller amount. As a beginner, you may not have enough grasp on how to choose stocks. However, with a small case, you read the strategy behind creating a particular small case and get a hang of how stockbrokers make a selection of stocks to create a small case.
The Bottom Line
Investments depend on an individual’s goals, responsibility and expectations. Investors should acknowledge their risk profile and choose the asset allocation accordingly. Make your research strong so that you can make better investment decisions. Experts say if you are young and do not carry any responsibility, you should prefer equity for making investments and less in debt. A responsible and in middle age investor should prefer debt over equity.