In India, there are multiple guidelines that an investor and the broker both have to follow to trade in the share market. The financial market watchdog, Securities Exchange Board of India (SEBI) forms these guidelines and regulations.
Therefore, if the stock you want to buy is trading at Rs 10, you can start investing with Rs 10, by purchasing a single stock of that company. It is amply clear you do not require a huge amount of capital to invest in the stock market.
However, you should have sufficient capital to purchase at least one entire lot of shares as prescribed by the IPO rules of each company. In the Indian stock market, the stock prices start from Rs 1 and go on till Rs 75,000. And therefore, to perform stock trading in India, you do not need any specific amount. You can invest any amount, depending upon your pocket size and financial goal.
However, in one of the segments of the stock market, you require a minimum investment amount i.e the Initial Public Offering (IPO). To apply for an upcoming IPO you need a minimum capital of Rs 15,000 (approximately). However, the minimum capital varies on the lot size and the price range of the share, but it can not exceed more than Rs 15,000.
Strategies To Decide The Investment Amount
If you are a new investor, you can deploy these three strategies to decide the investment amount:
100 Minus Your Current Age
It is one of the most important strategies among new investors. The strategy proceeds on the basis of reducing the risk of the investor as he/she ages. As per the strategy, the investment amount should be equivalent to 100 minus your current age.
For instance, if your current age is 25, and your total savings are Rs 10,000. Then, as per the calculation, 100-25 = 75. Your total investment amount should be 75% of the total savings amount. That is Rs 7500 in this case.
The X/3 Strategy
As a beginner, this might be the best strategy to use. It states that only “one-third” of the “X” amount should be invested while you are a beginner in the stock market. “
By deploying this strategy, you will understand if your stock selection is up to the mark or not. If yes, then you can deploy the same strategy again and buy the shares of the same company.
For instance, if you wish to invest Rs 4500. Then you can divide Rs 4500 into three parts, and invest simultaneously in three rounds. This strategy reduces the risk of losing the entire capital.
The 75% Profit Strategy
This strategy is not about deciding the investment amount, but it is an eye-opener for existing investors. As per the strategy, if 75% of your portfolio is in profits, you should continue investing in the stock market. However, having 100% of the portfolio in profits would be a miracle.
If you are a beginner in the stock market, you must have recently started earning. It is normal to have this question. The simple answer is that there is no minimum investment amount required to do trading in the Indian stock market. However, it is preferred that you put in your hard-earned money in companies with a good amount of potential to generate profit.
The investment choice of an investor is influenced by various factors and not only by the amount needed to start investing. For trading in the Indian stock market, deep research of the financial product and security is required.
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