Investing is a way to set aside money while you are busy with life and have that money work for you so that you can fully reap the rewards of your labor in the future. Investing is a means to a happier ending. Legendary investor Warren Buffett defines investing as “…the process of laying out money now to receive more money in the future.”
Many people put off investing because they think investing in stock market needs a lot of money to start. But, this is just not true. You can just start your investment with as little as Rs. 500/- per month. The key to create wealth is developing good habits like regularly investing small amount in share market every month. If you make a habit of investing regularly you will be in a much stronger financial position in the future.
You may come with a question like how to enter the stock market with little money?
There are various ways to start investing with little money and with the help of online and app based platforms it has made it pretty easier, all you have to do is to start somewhere. Just follow the below steps and learn how to invest in Indian stock market with little money:
- Decide on how you want to invest in stocks
- Know your goal for investment
- Open an investing account i.e. demat and trading account
- Set a budget for your stock investment
- Learn about stock market basics
- Start investing
How to invest in stocks for beginners with little money?
Here are some tips that should be followed by beginners:
- Set Long-Term Goals:Before investing you must know your goal and the likely time you may need fund in the future. Investing in stock market for a long term can result in good returns.
- Make up for the misses: Investing regularly requires commitment. All you need is to be regular and consistent. Saving a regular sum can make you profitable. If you could not save in the stipulated time this week, in the next week make up for it.
- Understand Your Risk Tolerance:Risk tolerance is also affected by one’s perception of the risk as by understanding your risk tolerance, you can avoid those investments which are likely to make you anxious.
- Control Your Emotions:You are bound to be emotional and overwhelmed when you first start investing in stock market as earning good returns may make you happy but losing money may hurt. Learn to never make your investment based on your emotions.
- Handle Basics First:Take time to learn the basics about stock market and the individual securities composing the market as knowledge and risk tolerance are linked- risk comes from not knowing what you are doing.
- Diversify Your Investments: Investment diversification protects your money from adverse stock market conditions as when it comes to investing, it is advised by savvy money managers that investors must invest money in various asset i.e. diversify their investments. It protects from losing all assets in a market swoon.
- Be realistic:Never invest with an expectation of earning quick returns, it is better to be patient and start your investment.
- Invest in Mutual Fund through SIP: MF is a long term investment which invests in various securities and builds wealth if invested for a long period of time. The investment just starts with Rs. 500 a month.
Historically, equity investments have enjoyed a return significantly above other types of investments options. On the other hand, it also provides easy liquidity, total visibility, and active regulation to ensure a level playing field for all. Investing in stock market is a great opportunity to build wealth for those who are willing to be consistent savers. Just make the necessary investment in time by increasing knowledge and enjoy the power of compounding. The younger you begin your investing avocation the greater the final results.