How to Invest with Less Money
There is a notion that you need a lot of money to invest in the stock market. I also used to think the same way and thought I had to save up a decent amount of money before I began. And many others are under this false impression as well. There is this belief that only those who are wealthy can earn money through the stock market. However, that is not true. You do not have to be a skilled investor and nor do you need a ton of money to begin. Even beginner investors can do well regardless of limiting funds.
The main point to remember is that you need to cultivate good habits and use helpful resources, that way you will have self-assurance when you begin, which is imperative. This post will teach you how you can invest with modest money.
Aim to have around 25,000-35,000 rupees to begin investing. You save this amount up by keeping a jar aside and putting some money or extra change in there whenever possible. You’d be surprised at how quickly the money can start adding up. You can also use an online money market account to automate your savings.
A great way to get assistance is through robo-advisors. A robo-advsor is a digital platform that helps you invest money based on precise goals. This is also another way to mechanize your investing. This removes emotion from the process, and makes sure your investments are doing what they should be doing. The plus point of using robo-advisors is there is no bare minimum balance constraint and they are cheap.
Thanks to the fintech space (financial technology), it is a lot easier to invest in the stock market without that much money. Another excellent option is using a micro-investing app, to invest little amounts in index funds or stocks.
Mutual funds are another great way to invest with less money, especially if you are just starting to invest. Mutual funds are a group along with stocks and bonds, and are a great option for beginners who want to inactively invest.
Mutual funds don’t behave like stocks, and only trade once per day after the stock market closes. Also mutual funds are different from stocks because they have a minimum initial investment. In India, the minimum lump sum investment amount is Rs. 100 for some schemes. This is great because you can automate your investing and begin with little money.
It is important to not allow having less money dissuade you from investing. When you have less money it can be easy to postpone investing, and that does make sense, but it also ignores the most important aspect of investing, which is time. Time is required to make your money grow, for a best possible future, due to a concept called compound interest.
The graph below demonstrates this perfectly. Source: Business Insider
You can see that you actually have less money to save as it has more time to grow, if you start early. This doesn’t make much sense, but it does demonstrate the concept of time in investing. Don’t fall into the trap of thinking that the money put into the stock market each month won’t do anything. This will only keep you back from growing your wealth. You may not feel an urge to start saving for retirement now, but here many be many other goals that will urge you to invest such as going on a nice vacation, or buying a house.
Regardless of the reason, the common factor in meeting any goal is time. Find ways to save up money, and reduce your spending so you can start investing. You can start with less. It doesn’t really matter how much you begin with but you should be patient and confident that the money will grow.