It’s a myth that you require a lot of money to start an investment in the stock market. But on the contrary, you can start investing even with a minimum budget by following certain principles.
- Build a saving habit: For a successful investor, the habit of savings is crucial. Ideally, you should save 20% of your total earnings in a month after keeping some funds for emergency. But, this percentage can vary from person to person. The point is to start saving small amounts & invest the same in the market.
- Need not invest in lumpsum:Normally, people invest lumpsum amount in stocks, but you can do your research, shortlist the shares you are interested in, & invest in those shares at every significant fall. For executing this strategy, you do not need to have lump sum money. You can invest in portions that will lower your risk as well. Use the volatility in the market to enter in shares at lower levels & build your long-term portfolio.
- Quality over quantity: Often, people invest in the shares based on suggestions given by relatives or an advisor & accumulate all the shares in their portfolio. You will need to research, understand the business of the companies before investing in any stocks. Although you need to diversify your portfolio, it is advisable not to accumulate every share. By following this principle, you can build your portfolio of quality stocks even with limited funds.
- Long-term investment: Generally, people do not have the patience to hold the shares for the long term. People tend to sell off the shares after earning profits of 10-15%. So in a way, people don’t give a chance to their investments to create wealth. Take the example of MRF- the share price of the share was Rs.1,900 in 1999, in 2021 it is Rs.trading around Rs.80,000 & that becomes the return of 4,070.57%. Now imagine those who left the party after 10-15%.
That doesn’t mean you forget after investing in stocks till you find any red flag that could impact companies’ long-term growth. Instead, you should track the financial performance of the companies quarterly,six monthly & yearly. Also, track the business growth strategies and news about the companies to decide whether to continue or exit.
So, you can start investing even if there is a budget constraints, as this limitation can be your blessing in disguise in the stock market journey.
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