The best way to save your money is in the form of investment. Best part is that you do not require lots money to invest. Even if your earning is low then also you can make small investments. In the past one require lot money available in order to make initial investments. But today things have been changed, and you can invest as low as Rs 500 monthly. Here are some of the ways where you start with investing very little money upfront.
Buy Stocks Directly:
If you are planning to invest in a good IT company or in a Bank, then you can consider direct purchase plan popularly known as DDP, which allows you to purchase stocks directly from the company itself. There is no brokerage or any middleman, which will charge commission from you, so you can directly get a valued stock from the company itself. DDP faces one major drawback that not all the Companies allow you to invest directly with them.
The real benefit of investing in DDP is that you are not charged for any kind of brokerage, and also you have been given the choice of buying only few stocks. You can buy even just half of a share and then you can continue to use small amount of money to purchase more stocks over time.
Investing in Mutual Funds through SIPS
SIPs have been a kind of revolution to small Mutual Fund investor, who do not have enough money to invest in mutual Funds in one time. Investing through SIP in a mutual fund is considered as the best way as SIP offers the following advantages:
• Rupee Cost Averaging
• Compounding
Through SIP one can invest as low as Rs 500/month in Mutual Funds. These Funds, offers growth and dividend option for redemption of money in Mutual Funds. If one need his payout to be made yearly he can go for dividend option else for long term he can consider growth option in Mutual Funds.
Using ETFs:
You can also consider ETFs Exchange Traded Funds, are also considered as another good investment avenue. Unlike a mutual fund that may impose a minimum initial investment, ETFs trade like stocks. They have a specific share price and can be purchased through virtually any broker. So, with an ETF you can buy just a couple of shares as long as you have enough money to buy the shares.
The disadvantage that ETFs has is you have to pay the brokerage; since commission varies from broker to broker, so the brokerage can eat up your money. One way to reduce buy ETFs less frequently and with slightly larger amounts of money you can keep your transaction costs down.
Small investments made in early can give you a big amount during your retirement period. So it's always better to start investing as early as possible even if your earning is low. As your earnings increase you should try to invest more amounts, which will not only be your savings, but will give you better return on your savings, so this will increase your savings.
More deatails about Small Investments and Tax Saving.
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