How much money do you need to invest in stocks market?

The Indian stock market is basically divided into two stock exchanges. National Stock Exchange (around 2000 companies listed) and Bombay Stock Exchange (around 5000 companies listed).

The companies listed and traded on the stock exchange have a price range from low of Re. 1 to the high of Rs. 74000 per share. Now the question is how many numbers of shares you wish to purchase and of which company? Also, note the broker will charge you brokerage charges and certain mandatory government taxes.

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Investors are often confused about how much minimum amount they can invest in the stock market. There is no rule as to what minimum and maximum amount one can invest in stocks. Though this question has been asked by those who wish to start investing in the stock market, it might have crossed others’ mind too who are sitting on the fence, and who have small regular savings.

Technically your bare minimum amount required depends upon the requirements of the brokerage firm to open an account and operating it. Operating or maintaining charges have to be paid on yearly basis. There are many online brokers where you can open an account free that is no requirement of minimum account balance. Even to purchase shares your invested capital should be a bit more than (Number of shares x share price plus brokerage charges plus taxes).

One should note that brokerage commission for buying and selling stocks increase significantly on a percentage basis.  In other words, a higher amount of transaction negligible amount, it will be per transaction. Usually, it is ‘economics of scale’ which counts in your realized returns.

Apart from the cost of buying/selling, you have to think about how many different companies’ share you will buy/sell. It is suggested that you buy minimum shares of 15 to 20 different companies representing different sectors/industries so that you build up a diversified portfolio. By diversifying your portfolio you are actually minimizing (spreading) the risk that you can take, as share market is volatile.

There is a number of shares that are priced below Rs. 10 each. You do not have to put in thousands and lakhs of rupees to start trading in India.

If you are new to the stock market and are in a learning phase it is recommended to start with low. Anything between Rs. 100 to Rs.1000 will be good. Provided your sole intention is of learning. Even if you lose it will not hurt your financial standing.

If your intention is to earn as for your ‘day to day pocket expenses’ you can start with Rs.50000.

Buy shares of those companies that are traded actively. Have a disciplined approach, that is, do not get carried away by rumors (they are very frequent in the stock market). Keep an eye on your trading expense. Purchase sufficient amount of shares as the purchase of stocks in small amounts leads to higher acquiring cost. See to it that brokerage charges are the minimum. Opening a trading account can be free but for the transaction, you will have to pay brokerage fee for each and every transaction. Check if the trading platform is seamless and has various advanced tools or not, as they help you to come to form your decision.

In case you need any tips on which stocks you should select and which to leave contact us or take a free trial by filling up the online form.

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