How Can I Invest In The Stock Market On A Budget

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The Stock Market On A Budget?

05 Jan 2023

One of the many myths surrounding the stock market today is that you need a huge lump sum amount to be able to invest in it. However, this is simply untrue. As a matter of fact, you don’t need a large sum of money at all. You can start investing in the stock market with a contribution as low as just Rs. 500 each month. Surprising, isn’t it? Wondering how this is possible? In this article, we’re going to take a look at a unique investment method that allows you to invest in the Indian stock market today with just little money. So, let’s begin.

How to invest in the stock market with little money?

A Systematic Investment Plan (SIP) is a unique investment method that allows you to invest in stocks and mutual funds with very little monthly contributions. All that you need to do is open an SIP online by specifying the tenure and the amount of monthly investment that you’re willing to make.

Once you’ve applied, each month, the SIP will automatically deduct funds from your bank account on a predetermined day and use the funds to invest in the stock or mutual fund of your choice. This goes on continuously till the end of your selected tenure. And upon the expiry of your tenure, your entire fund balance can be withdrawn by you and used to further your financial goals.

What are some of the advantages of an SIP?

One of the many advantages of an SIP investment is the fact that it is customisable according to the needs and requirements of the investor. You have the freedom to choose almost every single aspect of your investment; be it the tenure, the amount of investment, or the fund that you wish to invest in.

That’s not all. Another major benefit that you get to enjoy is the fact that a Systematic Investment Plan allows you to effectively manage market volatility. It does this by purchasing more units when the prices are down and fewer units when the prices are high. When this is done for a considerable amount of time, the average cost of your investment goes down.

And finally, Systematic Investment Plans work on the concept of compounding. In an SIP, the dividends that you earn on your investments can be reinvested into the market. So, when you finally sell stocks or your mutual funds, the returns that you get would significantly increase.

Conclusion

So, there you have it. By simply investing in an SIP online, you can easily start your stock market journey with just a little bit of money. That said, there are a few things that you should keep in mind. Firstly, the minimum amount of funds required to invest in an SIP tends to vary depending on the mutual fund house. And secondly, not all mutual funds perform the same. Therefore, it is essential to choose the right fund to invest in.

If you would like to start an SIP right away, but don’t have a demat account. Then, you’re in luck. Motilal Oswal can help you open a demat account within just a few minutes for free. Get in touch right now.

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Can I pause my investments in an SIP?

What are the Benefits of Commodity Trading?

On opening a commodity trading account linked to a Demat account, you can get a load of benefits when you engage in this kind of trading. Commodity trading is a super channel for any investor who wants to hike up their pool of finances. Below mentioned, are some of the advantages of commodity trading whether trading commodities on the MCX or any other exchange:

Diversification

For a financial portfolio to be balanced, weighing potential risks, it has to be diversified in a way that assets are allocated equally. Commodity trading is a perfect way to diversify asset allocation, reducing the risk factor in a portfolio.

Reduced Manipulation

The stock market and exchanges are typically regulated by price shifts that are global in nature. This eliminates the risk of any manipulation in price that may occur internally.

Inflation Hedge

The prices of commodities can prove to be a safeguard against inflation. In contrast to any other investment instrument, commodity prices move in a way that is the same as inflation. This is because inflation is the result of high prices of commodities in the first place. Hence, commodity prices can be predictable in a sense. Furthermore, the prices of commodities are bound to rise during high inflation periods in the nation and profits may be earned thereof.

What are capital bonds?

Capital bonds, also known as 54EC bonds, are debt instruments that give you a fixed return on your investment. If you sell a house property and earn capital gains thereon, you can enjoy tax exemption by investing in these bonds. When you invest in a capital bond, you get to earn interest at a fixed rate. The interest is calculated on the face value of the bond. And it is paid out at regular intervals. Once the bond matures, you will have to redeem the instrument.

Sectorial performance question

How do I Invest in capital gain bonds?

Capital gain bonds are issued by REC (Rural Electrification Corporation Ltd), PFC (Power Finance Corporation Ltd) and NHAI (National Highways Authority of India) and IRFC (Indian Railways Finance Corporation Limited). They are not listed on any exchange. So, if you want to invest in capital bonds, you will have to buy them directly from the issuer - either in the physical form or in the demat form. You can invest up to Rs. 50 lakh in these bonds.

What are the different types of mutual funds in India?

How do mutual funds work?

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