When you hear the word investment, the first thing to click in your mind are the stock markets. Gone are the days when investing in these markets was limited to institutional investors or high-net worth individuals. Nowadays, even small investors are coming forward and investing in the market.
The modernization of markets by the use of onscreen electronic trading and dematerialization of securities has surely increased the accessibility to the markets. Also, awareness about investing and a substantial increase in the percentage of educated population has further boomed the number of active investors.
However, many people still have a misconception that investing in the markets require huge capital, but it is not true. You can start investing in the markets even by having little funds. Brokers have developed app-based trading platforms where you can open your trading and demat account in minutes and start investing with little money.
Today, let us discuss about some steps which you should follow if you plan to enter the markets but don’t want to invest substantial amounts.
1. Goal Clarity
Every investment has some or the other goal associated with it. You might invest for buying a house or retirement planning or for simply building a contingency corpus. Before you invest you should have goal clarity. Some of the goals can be in the near future whereas some will require funds after years You will need to invest in short-term or long-term assets depending on your goal. Your goal defines the time horizon of your investment, therefore, before you invest have a fixed goal.
2. egular Contributions
As we discussed you don’t need large capital for investing, regularly investing small amounts can also yield good results. However, when you invest with small amounts, you should be very regular with your investments. You should try your best not to miss any of the contribution date. For some reason if you miss any of the investments, you should cover the same on priority. Regular investments with small amount will help you in being on the track for achieving your goal.
3. Control on Emotions
Emotions and investing never go hand in hand. You should strictly keep your emotions out of the decision-making process when you plan to invest. There are high chances that you will end up making wrong financial decisions when you think emotionally. The markets are very volatile, and the value of portfolio can rise or fall depending on the market. Profits make everyone happy, but people often stop investing when they see loss. However, you should never stop investing and for that it is important to keep your emotions in check while investing.
4. Risk Appetite
It is pretty obvious that when you invest in the markets there are some sort of risks associated with your investment. Therefore, before you invest it is very important to understand your risk appetite or risk bearing capacity. You should plan your investment strictly as per your risk appetite, so that in case of any unfortunate loss, you will never loose beyond your financial capacity. You can get a free risk profile by contacting a SEBI registered investment advisor.
5. Research
It is next to impossible to tame the markets, but it is very much possible to invest using technical and fundamental research to predict market moves and make the most out of the opportunities. It is not possible for everyone to research the markets; this is here investment advisors come into play. These advisors have qualified researchers who provide recommendations for investing in the markets based on their research.
6. Diversification
Diversifications is amongst the best risk management strategies. You must have heard the proverb – you should never put all your eggs in the same basket. The same applies to the stock markets as well. You should diversify your portfolio across different sectors of the market so that in case any of poor performance from any of the sectors it will be covered by the other sectors. But it is very important to keep in mind that diversification should be in a limit because over-diversification can be very harmful for your portfolio.
Conclusion
Your investment capital should never limit you from investing. Investing with proper planning and research will yield good results. If you are new to the market you should invest with research-based recommendations from a SEBI registered investment advisor. Any investment made without proper planning or research will definitely end up in loss.
Happy Investing!
