SIP: Start Investment With Just Rs.500

Updated on:  

08 min read

The best thing about mutual funds is, it allows you to invest even a minimal amount of money. Mainly, the SIP plans will enable you to invest with Rs.500. If one chooses to invest in SIP, several funds that accept such a minimal amount of investment. 

One can invest in the fund, which is most suitable for him. The decision would depend upon the financial situation, the time horizon, goals set, risk-taking capacity and many other factors.

With an investment of just Rs.500, you can diversify your portfolio.

Let us understand various categories of mutual funds where one can invest in:

ELSS

Equity-Linked Savings Scheme is tax saver mutual funds. One can take a tax deduction of up to Rs.1.5 lakh under section 80C of the Income Tax Act. They allocate 65 per cent of their portfolio into equity shares and have a three-year lock-in period. Also, one can take a SIP for ELSS funds. The lock-in period ends after three years of each SIP instalment.

Large-Cap funds

These types of funds invest in large or blue-chip companies that have a proven track record. One can get the exposure of investment in such companies with a significantly less amount. 

Mid-Cap and Small-Cap funds

Mid-cap funds invest in mid-sized companies, and small-cap funds invest in small companies. The market capitalisation of such companies is less than large companies. With a minimal amount, one can invest in small and mid-cap companies, giving significant returns if it grows to form a large company.

Liquid funds

The debt funds invest the amount in the money market and different types of bonds. They are less risky as compared to equity-oriented funds. Hence, returns are also comparatively lower than equity funds. The debt funds are of various types, such as liquid funds, short-term funds, ultra-short-term funds, etc.

Liquid funds invest in highly liquid debt instruments. These debt instruments are for a short term with up to 91 days of maturity period. 

For example, the Treasury Bill, with a maturity period of 91 days, is a liquid instrument.

Short term and Ultra-short-term funds

Short-term funds have a maturity period of up to three months. Short-term funds invest in papers like Commercial Paper (CPs) or Certificate of Deposit (CDs). In comparison, ultra-short-term funds comprise short term securities with a small portion of long-term securities.

Hence, there are many options available in mutual funds to start an investment with just Rs.500. One can choose any category of investment according to their preferences.

inline CTA
Invest in Direct Mutual Funds
Save taxes upto Rs 46,800, 0% commission