How to invest in stocks with less money – Investing in shares for beginners

Hi guys, there is a big myth that only those who can save and invest who have high income and who have low salaries or have a limited budget cannot save or invest you might have heard a lot of people say this, but it is totally wrong.

In this post, we will tell you about 5 principles following which you can invest even on a low budget and can create wealth in long run.

1st principal – The habit of saving money

For any successful investor, the habit of saving is very important. If you are not able to save then how can you invest? So, you would have to prioritize savings monthly.

Ideally, you need to save 20% of your income regularly as soon as your salary comes, keep the 20% of the amount aside. It is not important that you invest a major portion of your saving every month. You can keep an emergency fund and savings for urgent needs that come up. But this is important that you be disciplined in investing some amount every month.

2nd principle – Liquid Funds

Rather than keeping your savings as cash at the bank, you can invest them in liquid funds.

What is Liquid Fund?
A liquid fund is a debt fund that invests in fixed-income investments like commercial paper, government securities, treasury bills and etc.

You can take your money out of liquid funds anytime and can redeem all units within 24 hrs. Generally, liquid funds give a better return than a savings bank account. The reason is that they carry the risk of mutual funds.

3rd principal – Making investment in portions to get the benefit of falling market.

Normally people invest lump sum in stocks, but the way to invest in stocks is to shortlist your favorite stocks after research and when their price falls, invest in small amounts gradually.

With this strategy, you can lower your risk.  And since stock markets are volatile, you can buy at cheap rates

4th principal – Good understanding of sectors and shares

The Indian stock market has around 4000 stocks. Normally people go on the suggestions of an advisor or a family member and invest without doing research of their own. It is better to invest in those companies and sectors which you understand and are confident that it would show good growth in the next 5 to 10 years. As an investor, it is not possible for you to analyze every company and sector. So you should focus and research on those specific companies to invest. And after the research, you find good stocks then you should invest in them and stay invested in them for the long term.

5th principle – Long Term Investment

Normally people sell their stocks after getting a return of 10-15% and due to this, you don’t give a chance for your investments to generate wealth. Now imagine if any investor sold the stock after making a return of 10 – 15%, they missed a great opportunity. But this also doesn’t mean that you forget after investing in a company’s stock. Till the time you don’t find a red flag that could impact the company’s long-term performance, you can stay invested till that moment. But when you feel that there have been some fundamental changes in either the company or the sector, then you can exit from that company or sector.

Conclusion:

So, after reading the article completely you know that an investor can generate wealth even if on a small budget by investing in the stock market but you have to keep patience. Please share this article with your friends and family members so they can also have some knowledge about it.

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