5 Ways To Start Investing With Low Capital in India

Investing and saving up for the future has always been my priority. I am very hard on spending money. To be honest, I invest at least 45% of what I earn. I prefer investing and let my money grow rather than spending it on unnecessary things.

Back in my college days, I started investing either in stocks or crypto-currency. The crypto market was at boom back in 2015–2017. But over time we all know that the market has crashed a lot. So, at present, I would not recommend you to invest your hard-earned money in crypto but there are a few other safer bets.

P.S: You should always diversify your investment. A diversified portfolio is always a better option as it will have a good balance of all the investment methods and can cover up losses (if any).

Diversified ways of Investing -

Stock Market

I invest 9–10% of my earnings in stocks every month using Zerodha. I buy some new stocks or average out my existing portfolio. You can invest Rs. 1000 every month, but make sure you choose the stocks wisely. If you don’t have the required knowledge, please learn and then invest or else you should select any other investment method stated below. You should select stocks depending on fundamentals. If you know and understand the business and are very sure that the company is and will keep on growing, you can invest in it. And I personally select stocks which are fundamentally strong and pay out dividends. Dividends are nothing but a portion of the profit that the company makes that is paid out to all the investors in the form of dividends.

Public Provident Fund (PPF)

Considering, you’re 18+ and so you’re eligible to invest in PPF. I started a PPF account earlier in 2019 only for long term like 15+ years. Best bank to open a PPF account - Bank of Baroda, HDFC Bank or ICICI Bank or any other which provide online transfer, so you don’t have to stand in a queue every month to deposit your money. You can invest Rs. 200-500 every month in your PPF account.

Tip - If you plan to invest in PPF, please make sure you add funds on or before 5th of every month to earn interest for that month. For example, if you invest funds on the 7th of any month, you won’t earn interest for that month. You’ll earn interest on that amount the next month.

Recurring Deposit (RD)

Unlike Fixed Deposit (FD), you don’t need the whole amount at the time of starting your investment. You can start investing in a new recurring deposit with as low as Rs. 500 a month.

Tip - You should invest for 2–3 years, to earn maximum interest rate.

Mutual Funds

Mutual Funds are comparatively a safe bet if you don’t have any prior knowledge of investing in the Stock Market. As you don’t have to actively monitor your portfolio. But you do need to invest in good quality MFs. So proper study is necessary to select some quality funds. To begin with, you can invest Rs. 1000 every month in MFs for good annual returns up to 12-20% depending upon the market.

Unlimited free investments in direct mutual funds - Coin by Zerodha.

Liquid Cash / Emergency Fund

This is nothing but the emergency fund that one can use in case of any emergency (not only health related but maybe for some extra shopping or leisure). And one should always keep some funds in hand so as to pay any unexpected bill or for any personal reason. And so, you should keep some amount, say Rs. 1000 in savings for any uncertain event that occurs, may it be an adventure trip or buying new jeans (you never know). Even this monthly saving will earn you 2-6% in annual interest depending upon your bank’s saving interest rate.

This is how I have and would have diversified my money and invested into different forms. All the figures are just for illustration and you can increase/decrease it based on your personal preference.

Hope it helps. If you have any query, please feel free to comment down below and I'll be happy to help you.

Happy Investing!

An Indian Investor