Whenever a person who is new in stock market thinks of investing , he gets this basic question that how much money shall i invest in stock market. In this article , we will take a loo at what is the minimum amount for stock investment in India.
Where do you want to invest
The first question probably you should ask while you plan to invest in stock market is where do you wish to invest in stock markets. There are different asset classes available to invest in stock market. Some of popular financial instruments are
- Equity Stock
- Mutual Funds
- Exchange traded funds (ETF’s)
- Digital Gold
Each of above asset classes are different and have different minimum capital requirement.
One of the most popular investors in stock market has said – Don’t keep all your eggs in one basket Diversification is exactly the same term. In very simple terms , it says that if you have 100rs , dont invest all 100rs into one asset class. Rather invest 20rs in stocks , 30rs in Mutual funds, 40 rs in gold etc. etc. This will help you to manage risk because even if one asset class doent perform well , we will have others going good
How much minimum amount required to invest in stocks
Well in simple words, you need amount equivalent to cost of 1 share to buy that stocks , plus small additional charges charged by your broker and government taxes. Lets undertand this by and example
You can buy 1 packet of biscuit for 20rs also , and another companies biscuit for 50rs also. It depends on cost of biscuit. Similarly we have shares or stocks of different companies. in below image you can see share price of reliance is 1993.75. So to buy 1 share of reliance you need minimum 1993.75 + other charges(around 1%) . But for ICICI share which is trading at 510 rs , you will need 510rs only . So minimum amount for stock investment inIndia is cost of the share or stock you want to invest
How much minimum amount required to invest in Mutual Funds
In mutual funds, we can invest in multiple of unites. When you select any mutual funds, it will show you how much minimum amount you can invest.
Example below , you can invest minimum 500rs in Axis blue-chip fund. Minimum investment amount is usually 500 in most of the funds. It also may be 1000 or 5000 depending on Fund.
How much amount should you invest in Stocks and Mutual Funds
Its usually recommended that invest total of (100- your age ) into Equity and rest into low risk assets. Example if your age is 25 and salary is 50,000 and you want to invest 10,000 per month , you can select (100-25) = 75% of 10,000 into equity and mutual funds while 25% into real estate, FD;s etc.
So you can invest 7500rs into mutual funds or stocks(depending on your knowledge – if beginner then stick to top mutual funds) and 2500rs into FD’s or any other low risk assets