5 best ways to start investing with just Rs 1000 per month

You can start investing in mutual funds with as low as Rs 500 per month.

The best part about investing is that you don’t need to wait on the sidelines till you accumulate a large corpus to start investing. While that might be true for large-ticket investments like purchasing a piece of property, etc., most retail investment options can be started with as low as Rs 500 or Rs 1000 per month.

Today, we will be sharing five ways to start investing even if you can spare only Rs 1000 every month.

1. Stocks

Yes, you can invest in stocks and create a good portfolio even if you start with Rs 1000 every month. While this amount might render some costlier stocks out of your reach, there will be a huge market of stocks priced lower than you can invest in. “Even if you are buying a handful of stocks, if you have researched the market well and invested in a fundamentally strong company with an investment horizon of 7-10 years, you reap results. You can choose one or multiple stocks to buy based on the stock price,” says Harsh Jain, Co-founder and COO, Groww.

2. Mutual Funds

You can start investing in mutual funds with as low as Rs 500 per month. Mutual funds allow you to own a piece of a basket of costly stocks even when you invest merely Rs 500/1000. While the returns can be diluted as compared to direct stock investments, if there are megabrands that you believe in and want to invest in, then mutual funds ensure that you get an opportunity even by investing a small amount. Additionally, most mutual fund schemes offer systematic investment plans or SIPs that are ideal for regularly investing a fixed amount every month. Apart from equity, you can also invest in debt instruments.

3. Public Provident Fund

A Public Provident Fund or PPF is a low-risk option of investing your money. Currently, you can earn an interest rate of 7.1 percent per annum if you invest in PPF. It is backed by the Government of India and offers income tax exemption of up to Rs 1.5 lakh per annum under Section 80C of the Income Tax Act, 1961. “It has a lock-in period of 15 years. So, if you invest Rs 1000 every month in a PPF account, by the end of 15 years, you would have invested Rs 180000 and received a payout of Rs 325457 apart from the tax benefits,” informs Jain.

4. Recurring Term Deposits

Most banks offer a product called ‘Recurring Term Deposit’ that allows you to deposit a fixed amount every month and earn interest rates applicable to deposit accounts. Currently, you can open a recurring term deposit at interest rates ranging from 3-9% per annum. This is a good way to instill the habit of saving and investment at zero risks.

5. National Savings Certificate

The National Savings Certificate or NSC is a Government of India initiative offering complete capital protection and assured interest. Currently, the rate of interest of an NSC is 6.80% (for 5 years). You can buy them from any public sector bank or three private banks (ICICI Bank, HDFC Bank, and Axis Bank).

“The amount invested in an NSC qualifies for tax exemption up to Rs 1.5 lakh under Section 80C of the Income Tax Act, 1961. So, if you invest Rs 1000 in an NSC, then after five years, it will grow to Rs 1389.49. In one year, you would have invested Rs 12000 that would cumulatively grow to Rs 16674 in 5 years,” says Jain.