How to Invest in the Stock Market with Small Money?

 

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 small 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 And upon the expiry of your tenure, your entire fund balance can be withdrawn by you and used to further your financial goals.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.