People believe that there is a requirement of significant capital to start making investments in stock market. However, that’s not true! A beginner investing in stock market with 500 Rupees and start to experience the benefits of compounding. All an investor needs is a strong eye for the company’s expected performance, understanding of the mechanics of market volatility, etc.
More often than not, it is widely advised that initiating an investment journey at the earlier stages in life can be significantly rewarding. Despite of this fact, there are several reasons why people delay their investing journey for a later time.
While some people delay their investments because of lack of financial knowledge, there are people who still delay their investments because they don’t have surplus capital. Therefore, investors should know that they can start investing in stock market with 500 Rupees.
So, if you’ve been delaying your investment journey because of the lack of significant capital, don’t you worry. All you need is INR500.
There are several ways with the help of which you can start investing in stock market with 500 Rupees in India. Let’s have a look.
1. Starting a Systematic Investment Plan (SIP)
An investor, who is a beginner, can start his/her investment journey by investing INR500 each month in mutual funds through SIP (Systematic Investment Plan). In long term, such small investments will continue to add up and will become a large corpus because of the power of compounding.
SIPs provide several other advantages like: An early start, Rupee cost averaging, and Disciplined savings. One of the major benefits which SIP gives you is rupee cost averaging. If prices are lower, an investor can purchase more units of a particular mutual fund.
And the prices are higher, you can purchase fewer units. This eventually helps in bringing down the long-term cost of investment. SIPs can help an investor to save money in a disciplined and consistent fashion. This enables an investor to create more wealth over the course of time.
Following will help in understanding how you can start investing in stock market with 500 Rupees and generate a corpus in the long-term.
| Particulars of your SIP | Investment details | |
| Monthly investment | INR500 | |
| Investment period | 20 years | |
| Total investment (INR) | 120000 (INR500 * 12 months * 20 years) | |
| Expected rate of return | 10% p.a. | |
| Investment value at the end of 20 years (INR) | 3,82,848 | |
| Total returns earned (INR) | 2,62,848 |
As shown above, a monthly investment of just INR500 each month has the potential to more than double the total investment? Investors should know that consistency and disciplined investing are the critical factors here. Apart from this, investments should be done as per the risk appetite.
For example, a younger investor can take on more investment risk and they can choose equity funds which can deliver higher returns. As and when time passes, an investor can transition to debt funds.
2. Investing in Direct Equity
An investor might think that INR500 is a small amount while investing directly in equity. However, it is not too small to buy some of the direct equity investments. Investing in direct equity should be chosen by investors who have higher risk appetite.
That being said, even if your risk appetite is not high, investing just INR500 in direct equity is not much of a risk. However, now you’d think that can this small amount of investment really turn into lakhs in the long-term? Well, it is dependent on numerous factors. But an investor can truly make sure that his/her investment of INR500 delivers as much returns as possible.
Therefore, following points are important.
1. Choosing growth stocks
Growth stocks are those stocks which can grow at the much higher rate in comparison to industry average. So, if an investment in a blue-chip stock can deliver a return of 18%-20%, there are some growth stocks which have deliver much higher returns. The range can be from 40%-500%. Yes, you read that right! Therefore, identifying the growth stocks can be of huge help.
For example, shares of Patel Engineering Ltd have delivered significant returns in a short period of time. The stock, which currently trades at INR52 (price as on 6th October 2023), was once trading at only INR15 (price as on 10th April 2023). This means that the stock has delivered the return of ~246.67% between 10th April 2023 and 6th October 2023. Now, that’s the power of investing in growth stocks.
2. Staying invested for the long term
This is another hack for making money in stock market. Be it a blue-chip investment or a growth stock investment, an investor should consider investing for long-term. Such investors will not pay heed to short-term uncertainties and fluctuations.
Growth can take place overnight- primarily sustained growth. Therefore, it is important to be patient. If an investor is invested for the long term, the probability of share price growth is higher too. Apart from this, it is a widely accepted fact that equity investments can deliver strong and higher returns only in the long term.
Generally, more than one year considered a long-term in equity investments.
The stock of Mahindra Holidays and Resorts India Ltd currently trades at INR433 (price as on 7th October 2023). This stock was once trading at INR242.55 (price as on 23 December 2022). Therefore, this stock delivered the strong return of ~78.5% in just few months.
The stock saw some short-term fluctuations, but a long-term investor would not have paid much attention to short-term trends.
Conclusion
I hope now you know that you can start investing in stock market with 500 Rupees in India. You only need a mindset and a long-term vision. Investing in a disciplined fashion is a better way than trying to buy on opportunities.
It does not matter how small your amount of saving or investment might be, it is of utmost importance to start as early as possible. Through this, an investor can prepare himself/herself to reach the life’s goals.
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