How you choose to spend your money is what defines your financial status. You have Rs.10,000. It looks like a small amount to invest in the stock market but once you have started investing, you will be motivated to reinvest the profits. You can keep it in a savings account or invest it to grow in real estate, gold, silver, forex, commodities etc. You can invest in the stock market for long-term or short-term as per your wish in the following ways:
Invest in equity mutual fund
You can invest your spare money in equity mutual funds for long-term for 3-5 years to earn a higher return. You can buy funds with the whole amount or you can spend a fixed amount monthly or quarterly. You can take advantage of long-term capital gains and minimize your risks in the long run.
Gold investment is considered a safe investment tool even in volatile markets because gold prices have increased steadily over time. Bullions are less risky than other market-linked investment options. You can invest in jewellery or through ETFs.
Invest in direct shares
Investing in the equity market can grow your money. But it is risky. Follow tread with caution. Before investing you need to dig into the financial records of the business to ensure value investing and you can minimize your risks. Invest small amounts, in the beginning, say Rs. 5,000 to 10,000 only. To buy or sell shares you will need a trading account.
Other Investment Avenues
If you want other option than the stock market then think of the following options:
Fixed Deposit (FD)
If you want safety and returns, you can invest in a fixed deposit (FD) with a bank or NBFCs or post office, so that you can get moderate returns and keep principal amount safe. It’s better than keeping the spare money in your savings account. You can look for various strategies like laddering company FDs to get the best returns.
Buy term life insurance
You can purchase a suitable life insurance term plan where you need to pay a premium of Rs. 10,000 or less annually. You can also take advantage of tax deductions under Section 80C. It can be a good safety net for your family without worrying about how they will fend in case of early or sudden demise. You can take a simple vanilla plan with one of the best covers. Ensure you calculate the expected expenditure in accordance with inflation.
Important Considerations for Stock Market Investment
- Do the research carefully. Study the company’s fundamentals.
- Screening and filtering of the stocks are essential to choosing the right stocks for you. Invest in just one or two great stocks.
- Invest in what you know. Select an industry you understand.
- Take a competitive advantage by investing in sustainable companies.
- Invest in competent management stocks.
- Invest in Mid-caps as they have a high growth rate and have the ability to become a multi-bagger.
- Consider the Demat account charges
- Trading brokerage if you want to indulge in online share trading
The Bottom line
There is not much to lose for a small investment like Rs 10,000. You need not to diversify your investments. If you are planning to invest a small amount, then the reason to invest must be that you have spare money and you want to try your hands in the stock market for good returns. Once you start investing, you can make it big for sure.