New Investors often fall for the myth that in order to start investing, they would require a sizeable investment. This may have been true in the early 2000’s, however, this does not apply to the current day and age. Investors can start investing with as little as Rs. 100 a month. Investing can be exciting, mentally stimulating, and profitable. But, it can also be painful and investors can lose their money. So, it is essential to be careful and understand what product is better suited for your needs.
The key to building wealth is developing good habits—like regularly investing money. If an investor can develop this habit at an early age, he/she would be in a strong financial position down the road and would be better equipped to deal with any crisis life may throw at them.
Let’s examine 5 ways to start investing with as little as Rs. 100
1. Bank – Recurring Deposits (RD)
Recurring Deposit (RD) are time deposits offered by Banks, which allow investors to deposit a fixed amount every month in the RD account and earn interest. These deposits mature on a predetermined date in the future and help investors build up a sizeable corpus through regular monthly deposits.
Recurring Deposits carry low risk. The interest rate provided is varied and depends on which Bank an investor chooses. However, the interest rate range lies between 3.75% – 5.75% The minimum amount required to start saving with RD is Rs. 100. The minimum time period is 6 months and the maximum time period is 10 years.
2. Investing in Liquid Funds
Liquid funds are Debt Mutual Funds that invest in very short-term money market instruments such as treasury bills, government securities, and other such similar instruments, that hold a low amount of risk. They invest in securities with a residual maturity of up to 91 days. Liquid Funds do not have a lock-in period and do not charge exit loads.
Investors can earn approximately 7% return from their investment in Liquid Funds. The minimum amount required to start investing in Liquid Funds is Rs. 100. There are no minimum or maximum time period.
3. Investing in Digital Gold
Indians adore gold more than the people of any other country. Love for gold is deeply rooted in our tradition. Furthermore, Gold is also a reliable form of investment. However, to physically buy gold, an investor would require a sizeable amount of investment.
With Digital Gold, an investor can choose to invest as little as Re. 1 at any given point and accumulate gold in their online locker. An investor can also choose to redeem their investments in the physical form.
4. Investing in Equity Mutual Funds with Minimum Investment of Rs. 100
Equity Mutual Funds are professionally managed investment funds that pool money from various investors to invest in securities. These investors may be retail or institutional in nature. Earlier, the minimum amount to invest in equity mutual funds was Rs. 500. However, it was reduced to Rs. 100 in order to encourage investments.
There are several mutual funds that offer the option to invest Rs. 100 regularly, through the Systematic Investment Plan (SIP) route. However, these carry risk and an investor should carefully research about these funds before investing.
5. Investing in Equity Shares
Equity Shares are issued by companies to raise capital in order to grow their existing or to undertake new projects. There are several companies that trade below Rs. 100. However, this form of investment carries the most amount of risk. This would not be recommended to investors who do not consistently keep a track of the market. Only investors who closely follow the market should take up this form of investment.