What Is the Best Way to Invest in Stocks on a Small Budget | Motilal Oswal

Invest in Stocks on a Small Budget

The easy part of trading is how to open a share market account. Once a trader does that, the more challenging issue is how to trade to earn money. A common misconception in the trading world is that investors need huge amounts of funding to trade. This is so ingrained in the minds of investors that newbies find share markets a threatening place, although they may wish to start trading. Novices often neglect starting off with small funding, waiting till they save ‘enough’ to begin trading careers. 

  • Starting Off Small

Many traders open a broking account and a share market demat account to begin their journey in the trading arena. After they complete this first step, they may ‘sit on the fence’ as they fear of a loss of wealth. However, investors can start investing with as little an amount as Rs. 100 in the share market, buying stocks for long-term investment. There are some considerations when you wish to trade in the stock market with small amounts of money. When you plan to undertake stock market account opening, you need to set your financial goals straight to start trading. 

  • Think of Financial Aims

Stock market account opening may be an easy task for any investor, but to trade in stocks you may be required to do some homework. The first and foremost thing to do is to be clear about your trading goals. Ask yourself the reasons for which you wish to trade. The most obvious answer is to earn profits, but think of what you wish to utilize the funds you earn for. Is the profit going to be used to purchase a property? Or for your retirement needs? You may be using profits from trading to fund your children’s studies. According to the personal goals you have, after you know how to open a stock market account, you will be prepared to determine the timelines to reach goals and the kinds of returns you require. 

  • Gauge Your Tolerance of Risk

When you are on a small budget and want to trade in the stock market, account opening is the least of your worries. You should, more importantly, spend some effort on evaluating your tolerance of risk. This aids you in making a selection of various types of stocks. For instance, if you have a small budget to trade with, you may not want to risk trading in stocks that show much volatility, but rather long-term returns. 

  • Look at the Horizon of Investment

To be a successful trader, either with a small funding capacity or a substantial investment, you must invest in learning the tools of the trade before indulging in trading head on. To learn, you should sign up with a reliable broker like Motilal Oswal. While stocks and shares are prone to give you good returns over a decade or so, a good broker will help you in your selection of securities to give you decent returns on investment. 

Related Articles: How to Open a Demat Account Without a Broker | Factors to Keep in Mind While Opening a Demat account | Factors to Consider When Opening a Demat Account | 10 Points to Remember When Operating your Demat Account | Types Of Demat Account & Trading Account | Upcoming IPO | LIC IPO

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