I constantly encounter many people who tell me how they don’t have millions to invest in the stock market. They believe that investing in stocks is only meant for the rich.
Well, I share with them the success stories of icons like Warren Buffet, Rakesh Jhunjhunwala and several others, who started with less and ended up making plenty.
All you need: Rs 2,000!
Looking at these stock market millionaires, people assume that they would need a lot of money to start with. This is just a myth. Investing in the stock market can begin with as little as Rs 2,000!
It doesn’t matter how much money you start with -- what matters is what you learn. Let’s say, you learn the art of converting your Rs 2,000 into Rs 4,000 in a year. The profit of Rs 2,000 may not seem like a lot but in terms of percentage, you have made a 100 per cent profit.
Become a confident investor
If you have the knowledge to double the amount then be assured that it wouldn’t be very difficult for you to get funds from external sources. The knowledge gained will give you the confidence needed and help you believe in yourself. Friends and family might even want to give you their money to manage!
When you just start out, don’t worry about the returns you make. Instead, think in terms of percentage growth. If you can make 100 per cent on an investment of Rs 2,000 then you could make the same 100 per cent profit on a bigger amount like Rs 2,00,000.
Invest in knowledge
In the world of investments it is very easy to make money once you increase your capital. But in the first few years, you ideally need to focus on gaining knowledge. Returns might be slow in the beginning but with time your returns will rise significantly.
I was 16 when I started investing. I began with a capital of just Rs 750. My main mission was not to make quick bucks but to learn how things work.
I am glad I started with less and learnt with experience.
Diversification:
Let's say you have only Rs 2000 to invest. You might wonder how you can invest such a small amount and what purpose will it serve? You other concerns would be, does it make sense to even start with such little money?
Diversification is considered as a way to minimise risks. If your capital is only Rs 2000, you aren’t risking a lot but you can still diversify between 2 to 3 good companies. For instance, you can make an investment of Rs 1000 in two separate companies.
Quality over quantity:
Diversification is not the key to wealth creation, the magic lies in buying potential stocks at low prices. A lot of time, people end up losing money because they invest in several bad companies, I would rather invest in a few good companies than going by the quantity.
When starting out don’t worry about diversification, instead pay attention to selecting companies with good fundamentals.
I do agree that with only Rs 2000 you wouldn’t be able to buy certain stocks such as Reliance, etc. But there are hundreds of other companies which have stock prices which are much less than Rs 2000. Why not focus on them? Several stocks which have given me great returns were priced less than Rs 2000.
Take a look at some of the stocks I purchased and see how they have performed here:
| Stock | Buy Price | Price As Of Date |
| Spice Jet | Rs. 53 | Rs. 90+ |
| RPL | Rs. 60 | Rs. 220+ |
| Hotel Leela | Rs. 44 | Rs. 65+ |
Lessons to learn:
All of these stocks have done well and are much below Rs 2000. Presently, I am looking at a company which is largely undervalued and has a huge land bank and the stock price is much less than Rs 2000 too. I know it has assets worth more than nine times of the present stock price.
You don’t need a lot of money to start your journey and over time you will learn the art of investing in good companies. Don’t wait to start with huge capital instead start now and build you capital over time. Starting out with less is a great way to learn.
Today, look at people who have created wealth in the stock market. All of them started with less such as Warren Buffet or Rakesh Jhunjhunwala. None of them had huge money. They made their millions over a period of time, with the help of knowledge and experience.
Inshallah may Saraswati bless you with Laxmi, happiness, health and an ever smiling face this 2008.
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