Capital markets have seen a lot of popularity in India in recent history. Previously, there was a myth that the capital markets are just for the HNI and financial institutions, which used to invest their money in huge amounts. Although it has become popular amongst small investors recently, this has been possible due to the ease of investing money in the markets through electronic mediums and other technologies, despite of this people still fear entering the market because of a misconception that one needs a significant amount of money to invest. But for a fact, you do not need a high amount of money to invest, you can start investing with an amount, as little as Rs.5000-10000 by using good web-based and mobile-based trading platforms.
Following are some tips to start with a small investment:
Start with a clear set of goals:
Be it a small or a large investment, one must have a clear set of financial goals which one wants to achieve, That will decide the investment tool and tenure one chooses. At the beginning stage of an investor, one is advised to invest in the market with a long-term perspective. It is believed that in long-term investments the chance to make profits through investments is more rather than investing in the short-term, so it is advisable to invest in the market with a long-term perspective.
Take Risk Tolerance into consideration:
There are certain risks associated with every market investment. One needs to know about their risk tolerance capabilities while investing in the market. Making an investment in the right set of assets after knowing one’s risk appetite may help to maximize the returns while managing the risks and volatility. One can always consult an investment expert to understand their risk tolerance and the investment best suited for their needs. Start slow with little investment and then keep on increasing it as you gain more experience and confidence.
There are various instruments available in the market that allows you to invest small amounts of money every month. There are plenty of options, such as recurring deposits, SIP mutual funds, digital gold, Exchange Traded Funds (ETFs), stocks, etc. There is a lot of information about such instruments on the internet, research about them and then invest in those which suit one’s style.
Diversification is one of the best strategies that has been proven to minimize risks. By investing across various tools, one can minimize their risks, for example, if one invests in stocks, mutual funds, and digital gold and if stocks are not appreciating, their other allocation like mutual funds and digital gold could help them generate profits.
Emotions tend to dictate investors’ decision-making process, increasing the chances to make bad investment choices. Losses are a part of investing, one should understand that if they have invested in good quality stocks, they should have patience and hold their positions, and keep investing further. This will help them make more profits in the longer run.
During the covid-19 pandemic, people have shown a great interest in the stock market. The growing knowledge of investing and of different asset classes have accelerated retail participation. Asset classes other than equity generally lag behind the rate of inflation and offer lesser returns. As a result, millions of new, young investors have taken up stock trading, which is reflected by the addition of the number of Demat accounts on stock market depositories CDSL and NSDL surpassed 10 crores for the first time in the month of August 2022. This is a 60% increase in Demat accounts from pre-Covid numbers, which was around four crores. By using the tips mentioned above one can succeed in making money through the stock market, under favorable conditions by being disciplined, patient, and having a long-term view of the investments