Start Investing With A Minimum Income

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  • 27 Jan 2023
Start investing with a minimum income

Savings and investing go hand in hand. It is a myth that you need huge capital to begin investing. You can even save from your monthly allotment and start investing with an amount as low as INR 500. The earlier you begin this planning, the better it will prove to be in the long run. It’s all in the power of compounding!

Investing Tips To Begin Your Wealth Creation Journey

1. Start a SIP:

You can just begin investing in mutual funds with an amount as low as just INR 500 every month. With time, these meagre investments will add up to a big corpus, enhancing your future financial security. You begin investing in SIP early on without waiting for bigger capital. You can always invest more in a lump sum, in case of a bonus or any windfall gains, to expand your financial portfolio. Moreover, SIP inculcates the habit of organised saving. A simple calculation shows that if you invest INR 500 monthly for 20 years, it amounts to INR 1,20,000. If you calculate @10% p.a. as the average rate of return, it amounts to INR 3,82, 000.

2. Direct Equity Investment:

You can begin building your stock portfolio with just INR 500. All you need to do is do your research and then invest for the long term. Opt for companies with a proven track record and great management.

3. Open a Recurring Deposit (RD) with a Bank or Post Office:

This traditional investment scheme is one of the safest and most comfortable for most first-time investors. You can invest INR 500 every month in your RD account for 5 years, amounting to INR 30,000. With an expected return rate of 5.5% p.a., your value will stand at INR 34,575. The element of risk associated with an RD is low, but you need to keep the taxes in mind. The interest earned in Recurring Deposits is fully taxable and needs to be accounted for at the time of filing your returns!

4. Opt for Sukanya Samriddhi Yojana (SSY) account if you have a daughter:

This is a government-backed scheme wherein you can open one SSY account for every girl child. However, a guardian cannot open more than two such accounts. In case a parent has one daughter and twin daughters, three accounts can be opened. You need INR 250 to open each account. The minimum annual investment is INR 250 and the maximum limit is INR 1, 50, 000. You can make deposits here for 15 years and the maturity period is 21 years.

5. Secure your life with a life insurance plan:

Term insurance is a pure protection plan and should be taken as a safety net for your family’s financial security. You can opt to buy a term insurance plan with a small amount of money, which could be paid every month.

Thus, delaying your investments while waiting for money is not a great idea. You can start small and choose to step up your investments as and when you have more money at your disposal. With various types of investment strategies, you can build your corpus, maintaining proper alignment with your financial targets and risk tolerance level.

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