Don’t have money to invest? 6 ways to start investing with a lot less money than you think

Updated: July 12, 2018 4:24 PM

Contrary to the belief that a large sum of money is required to start investing, even small sums of money over time can make you wealthy. Here's how!

how to become rich, investment, investment types, investment calculator, mutual fund investment, SIP, small savings Following a disciplined approach to investing, choosing the right asset class and having a long-term investment plan is important.

Most times we think a large sum of money is required to start investing. On the contrary, much like little drops of water which make up the mighty ocean, small sums of money in the form of Systematic Investment Plans (SIPs), and the right mix of assets, over time will make you wealthy.

Here are ways to invest with a lot less money:

1. Start – size doesn’t matter, starting does!

There are many who assume that you require large sums of money to start investing. Wrong! Investing doesn’t require hoards of money, it requires getting started. Delaying key financial decisions can cost you dearly. We are always split between ‘Day 1’ or ‘One Day’. If only we can avoid the one day syndrome and opt for financial planning from Day one, you are sure to get a grip of your money matters. Your financial planning should start from the day you start earning. Many of us have the tendency to push money planning to another day or postpone it till the last minute, simply because we have something else to do or we don’t understand it.

2. Be consistent

Once you start investing, it’s very important to be consistent at it. Following a disciplined approach to investing, choosing the right asset class and having a long-term investment plan is important.

Being ignorant of the right investment avenue that suits you, Not staying invested long enough, switching investments to make allegedly smart moves, which prove to be quite not that smart in hindsight are some errors that can be avoided.

For example, when you invest in fixed income securities which provide stability, the returns are stable yet consistent and limited. However, equities for the long-term investors provides a huge upside potential and the initial risk and volatility evens out eventually to produce a higher return.

3. Channelize – even small savings

A rupee saved today is a rupee earned tomorrow. Though small savings may not impact you in the short term, it can help you in a big way in the long run.

For example, piggy bank is a brilliant example of small savings mobilisation. When done periodically with patience, the result always surprises us with how much it ends up with. If the same could also grow meaningfully over time, you end up with higher monies than what’s invested.

4. Increase your investing quantum over time

As your income grows, your quantum of investment should also increase over time. If your pay cheque has increased, your savings should grow too.

Most of us will acknowledge the fact that somehow our expenses run up when our income rises, this happens due to our unconscious expenses building up. Therefore, if we don’t scale up our savings with every increase in income, we will be savings much lesser over time.

5. Be Patient

All sound investments require ample holding time to deliver optimal returns. Patience is the new intelligence. Time is your greatest strategy and tactic. Great results are achieved with long term, disciplined and patient investing. One may miss out on the opportunity to make big money due to lack of patience and priority. It takes a strong resolve to keep faith in your investments and let them appreciate and grow over time to yield maximum gains. Remember, fluctuations are a part and parcel of your investment cycle. Don’t lose faith with one downward trend. Over time most risks and challenges that initially appear in a good investment get evened out to produce superior returns.

6. Time – Less but consistently done is a lot over long time

You can start off with an investment as small as Rs 500 per month (remember the age old maxim, a penny saved is a penny earned) through a Systematic Investment Plan in a mutual fund and nurture it for a 5-8 year period. Your investment will benefit from better yields through the year and also over the years, through averaging out returns over the various business cycles that the market experiences. Further, your investment will not only gain from the power of compounding over the years, but also give you the necessary tax savings. In addition, you also profit from completely efficient-free earnings for staying invested in mutual funds for a period greater than a year.

(By Santosh Joseph, Founder and Managing Partner, Germinate Wealth Solutions LLP)

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