While it often seems to a layman that investing in the stock market requires a large sum of money, this isn't really true, especially in today's Indian financial markets where quite a few options allow you to invest even with small amounts. If you ever wonder how to get started investing in the share market with minimum money, this is the guide you need.

In this blog, we guide you on how you can begin investing in the Indian stock market without needing to have a huge amount of money.

Why Start Small in the Share Market?

For new investors, small beginnings are the best steps. You will experience how the market functions, have built-up confidence, and risks are reduced to a minimum. The good news is that Indian stock markets provide many avenues where even the smallest amount of money invested can grow over time.

Let's get into some practical ways to invest in the share market with a small amount of money.

• Open a Demat and Trading Account

  
  First, to invest in shares you have to open a Demat and trading account. Such an account holds all of your shares in electronic form, which can make it much easier to buy, sell, and otherwise maintain control of your investment.
  
  The majority of the brokerage houses in India provide low-cost or even zero account opening charges. Many of them also provide free trades for small investors. So, always be sure to opt for a broker that suits your pocket and requirement.

• Start with Low-Cost Fundamentally Strong Stocks

  
  It does not take much money to invest in the stock market. Indian stock exchanges have several such companies listed at different price levels and fundamentally good stocks, though not expensive to invest.
  
  For example, instead of investing in large companies or expensive stocks you can also look for small or mid-size company stocks that have potential to grow.

• Invest in Fractional Shares or Stock SIP

  
  Although this idea is more prevalent in the U.S., many brokerage houses in India, like Chola Securities, enable you to buy a fractional share or invest in stock even with minimal amounts. That means if a share costs ₹10,000, with the help of Stock SIP the investor can invest as low as Rs 1000 to own a fractional unit of that stock.

• Invest in Mutual Funds

  
  If you are not sure which stocks, you should buy or where to start, mutual funds are an excellent starting point with investments beginning at just ₹100 per month through SIPs. Mutual funds collect funds from numerous investors and then invest in a diversified portfolio of stocks or bonds, thus giving you market exposure on a broad scale with very little investment.
  
  SIPs also facilitates making an auto investment, which is a very disciplined method of creating wealth over the long term. If you are not sure which mutual fund you need to invest in, then index funds are best, as they will allow you to invest in the entire index without the pain of doing research and diversification.

• ETFs

  
  You can also enter the stock market at quite low costs using Exchange-Traded Funds (ETFs). ETFs are in many ways similar to mutual funds but, unlike the former, are traded on the stock exchanges like ordinary shares. With ETFs, you could invest in a basket of stocks representing an index, such as the Nifty 50, or a sector such as banking or IT.
  
  Just like mutual funds, you can invest with any amount of money you have in hand, and due to the fact that they are traded in the stock market, you are allowed to sell and buy them as you would other shares.

• Diversify your portfolio

  
  Even if one has invested small amount, it is important to diversify investments. Spread your money to different stock investments instead of putting it all in one stock or sector. You can find diversification also in mutual funds, ETFs, or bonds. Diversification lessens the risks and balances your portfolio during fluctuations.
  
  For example, while investing ₹500, you can invest ₹250 in an equity stock, ₹100 in an ETF, and ₹150 in a debt mutual fund. So, you will distribute the risk so that you can benefit through different market trends.

• Invest in Dividend-paying Stocks

  
  If you invest in dividend-paying equities, then the other method of using the dividend is called reinvesting. These equities allow you to reinvest dividends so that you can buy more shares of the stock, and your money compounds over time.
  
  You may even start off with a smaller amount; still, if you allow the compounding forces by reinvesting your dividends, that will prove to be highly beneficial for the long-term accumulation of wealth.

You can begin investment in the stock market with minimal money; the processes allow you to have that experience and grow your wealth in the long run. Low-cost stocks, mutual funds, ETFs, and fractional stocks help you to begin investment with minimal capital. To do it perfectly, be patient enough; start small and gradually increase to a diversified portfolio.

Invest even if it is some pennies regularly and watch the difference that would be made for your financial future. As it is said, "The best time to plant a tree was 20 years ago. The second-best time is now." So, do it today, and over time, observe how your investments grow.