Generally, when someone says investment we immediately assume it means keeping aside a large chunk of money. However, most of us fail to understand that we can start saving and investing even if we have little money. Investing a small amount of money for a longer period can reap you sizeable returns. There are several ways in which you can start saving by investing a small sum without feeling the burn.
Here are some of the steps to start investing money:
1. Don’t wait for the right time
First and foremost, you should not wait for the right time to start investing. You should know that you don’t need to poses a huge amount in order to start investing it somewhere. Your financial planning should be a priority as soon as you start earning. New investors should not delay setting a financial goal and start investing at the earliest as they have limited liabilities and hence, they can take a few risky investment decisions.
2. Investing in SIP
SIP (Systematic Investment Plan) is an easy form of investment that enables an investor to invest a predetermined amount of money in mutual funds at regular intervals. As you invest a certain amount of money for a regular interval, the investment accrues more money over time. If you make the investment sooner, you have a higher a chance of earning aggressive returns in the long run. SIP investment leads to disciplined saving which alternately results in successful mutual fund investments. You can start SIP with any amount and it totally depends on how much you can save up from your income. Investors can also look out for mutual Funds as they are currently stated as one of the most dynamic forms of investments in India.
3. Consistency is the key
It must be noted that financial discipline plays a crucial role when it comes to planning as well as executing your investments. Once you pick an investment plan, make efforts to follow it rigorously and maintain consistency. It is advised to stick to an investment plan and not jump from one investment to another to get quicker and higher returns. For example, investing in stocks is one of the best long-term investment options that has proven to offer great returns for a large number of investors. You can refer to books, blogs, and websites like bankbazaar to get detailed information about popular stocks. Another type of investment that you can go for is recurring deposits. The interest rate offered by different banks to a recurring deposit account holder generally ranges from 3.5% to 8.5% p.a. The minimum amount to be deposited to open an RD account is Rs.100 for public sector banks and varies from Rs.500 to Rs.1,000 for private sector banks
4. Go for a cookie jar approach
We all are aware of the cookie jar approach that our grandmother used for years. Investors should understand that in order to invest money, you need to first save it. Take small steps and try to keep a fixed small amount aside every month. It is important that you gradually get into the habit of living on a little bit less than you earn. Putting a small amount of money every week may not seem like a lot but over a course of time, it will turn into a decent chunk that will come in handy. Thanks to a cookie jar approach, it becomes easier for you to manage your expenses well thereby spending within your budget and not going overboard.
5. Be patient
Patience is a virtue and it is extremely important when it comes to investment. In order to garner optimal returns from your investment, you need to have an ample amount of patience. Disciplined and patient investment planning will offer you great results in the longer run. Try to prioritise your investments and take smart as well as timely decisions. You need to believe in your investments and let them grow at their own pace. It must be noted that investment cycles will change periodically and you should not panic and be afraid to take risks.
6. Increase investment gradually
As time passes, you will have a stronger income in your hand and thereby a better purchasing power. In relation to your income, you should gradually start increasing your saving and investment. Be cautious of your expenses and try to limit unnecessary spending. Make sure you are saving more than you are spending. You have to make a conscious effort to start increasing your investment and build a diversified portfolio in order to get great returns. A diversified portfolio means you can start investing a small amount of money is different forms of investments in order to get better returns from all your different investments.
7. PPF and NPS
The National Pension System (NPS) is a government-sponsored scheme and hence is a more safe investment option. One of the best advantages of the NPS is that the contributor is entitled to a minimum amount of pension, irrespective of his/her contribution. A salaried individual can garner tax benefits as well as moderate returns while investing in the NPS. Another popular form of investment is the Public Provident Fund. One of the primary benefits of the PPF is the tax exemption on the interest earned under the Section 80C. PPF offers huge benefits in form of compounding tax-free interest that comes in handy especially during the later years
At the end of the day, you should understand that the accumulation of wealth is equally important if you want to invest in different financial verticals. Taking small steps towards investment will help you get decent returns in the long run. You can become a successful investor by having patience and right approach towards your financial goals. As an investor, you should be able to be in a position to where you can mark your own strategies depending on your financial requirement.