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How to Invest Small Amount of Money in India

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You invest today to achieve financial stability and security in the future. For maximum benefits, it is important that you invest regularly for a longer period to earn more returns. A big misconception is that you need to invest a huge amount to build a large corpus. This is not true and you may be able to build a substantial corpus even with a small amount.

Here are four investment options wherein you can invest smaller amounts to build wealth over the long-term.

  1. Equities

With a demat account, you may even buy one share of a particular company. Therefore, you are able to invest a small amount in equities. Furthermore, if you are a beginner, smaller exposure is advisable. You may increase the amount, as you understand more about equities and the share market basics. However, equities are risky and you need to consider your capability before making an investment decision. Moreover, as you grow older, it is recommended you reduce equity exposure in your overall investment portfolio.

  1. Systematic Investment Plans

Most mutual funds allow you to invest in different schemes through the Systematic Investment Plan (SIP) route. An SIP enables you to invest a small amount in your chosen fund at periodic intervals. The minimum monthly amount in an SIP could be as low as INR 500. This allows you to build wealth without facing financial difficulties. SIPs, when held for the long-term, are beneficial in wealth accumulation due to the power of compounding. The compounding effect means that your profits are reinvested in the same funds, which earn further income through dividends or interests. Certain plans, such as Equity-Linked Savings Schemes (ELSS) also offer tax benefits, which makes SIPs in these funds more profitable.

  1. Public Provident Fund

Public Provident Fund (PPF) has been one of the most popular tax-saving investments for several years. A PPF account may be opened in a bank or a post office. The minimum annual contribution to this account is INR 500. You must invest in the PPF account for at least 15 years, which gives you compounding rate of interest. The government authorities declare the interest rate, which may vary from one year to another.

  1. Gold investing

Gold has been a popular investment product in India for several decades. Historically, you invested in gold through either bars or jewelry. However, today there are several ways, in which you may invest in gold. Some of these products include gold mutual funds, exchange-traded funds (ETFs), and deposit schemes. These are more convenient to invest a small amount because you do not have to store the gold in a physical form and your investments are held in an electronic form.

Investing is not a simple one-time procedure. It requires understanding and research to enable you to make the right investment decisions. Several online tools and techniques are available, which help you execute the necessary research and analysis. Moreover, you may procure expert advice to help make the right investments. Robo advisory is fast gaining popularity because of its simplicity to use. These automated tools evaluate and analyze investment options and match the most appropriate products to your personal needs.

In addition to the research and knowledge, you will need a bank, demat, and trading account to invest. Several financial institutions offer the 3-in-1 accounts, which allows you to invest without any difficulties. Open an account today and start your investment journey.

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