Low Budget Investment Tips (Because Manifesting Isn’t A Strategy)

Who said you have to think big to be rich?

If you have watched Forrest Gump, you must remember the iconic transformation of a boy who couldn’t walk to a man who ran for 3 years, 2 months, 14 days and 16 hours. Gump embodied the power of small steps and persistence in a space filled with black-suited characters and quick money traps.

But what if Gump was not just teaching you life but also a key principle of investing? So, if you are postponing your investment plans because you don’t earn enough or you are too young for it, read along, as you are in for a surprise.

Broke Doesn’t Mean You’re Out Of The Game

While being broke can halt many plans, it cannot be your raincheck on consistent investing strategies. Therefore, before heading on to the low-budget investment tips, let us burst some bubbles.

Wealth ? Income, It’s All About Habits

According to Funds India, every one in three Indians believe that they do not have enough money to invest¹. So, you are not alone if you are waiting for your wallet to bulk up like your transaction history on Zomato, before searching, SIP vs lump sum investment, on Google.

However, the truth is, building wealth has little to do with your income. But, rather than giving you a long, detailed, jargon-filled explanation why, let’s take an example to understand the potential of the small investment ideas.

Imagine saving INR 2,000 a month and creating an SIP with it. Now, assuming an average 12% return, the table below shows your investment growth.

So, after investing INR 2,000 without increasing your investment at all, even to adjust for inflation, you can still earn INR 1.30 crores.

Start Investing Before Your Salary Becomes “Big Enough”

Now, imagine starting your INR 2k investment at 30. By the time you earn INR 1.30 crores, you will be 65 years of age. Not trying to be an ageist, but don’t you think scuba diving in Goa would be a bit difficult then?

However, what if you started this at 20? In that case, your INR 1.30 crores is ready for use at 55. Not a bad time to start checking off your bucket list, right? Therefore, if starting small is key to the best SIP practices in India, then starting early is what makes it successful. 

But what if INR 2k is also too much? Should you give up and wait?

Of course not! Let me tell you how to stick to SIPs on a tight budget.

Budgeting ? Cancelling Netflix

What do you imagine when you hear the words ‘tight budget’? 

Most imaging living on Maggi every day, no dine-outs, cancelling all OTT subscriptions, and so much more. However, the truth is, you can maintain a tight budget and follow low-budget investing without any of these. Let’s explore how.

Flip Your Flow: Spend After You Invest

We understand the feelings you get when, at midnight, you see a blueberry cheesecake for INR 200 and your GPay account shows a balance of INR 201.09. This is the true meaning of irresistible. At such month-ends, every investment plan goes out the window.

However, you can save yourself from this imminent trap if you can invest before you spend. One of the most prominent low-budget investment tips is discipline, not huge quantity. So, even if we invest a very limited amount REGULARLY, we can generate optimal returns.

Let’s explore how to invest with INR 1000 through this illustration.

Imagine visiting Starbucks two times less. Given that the price of a Venti Caramel Java Chip is around INR 535, with two less rounds, you would save INR 1070².

Now, if we make an INR 1,000 per month SIP, assuming a 12% average return, our investment can yield INR 35.30 lakhs in 30 years.

Now that we know ek chutki INR 1000 ki keemat, let’s move on to a more crucial question of how to make a budget.

The 50-30-20 Rule With A “Real-Life” Twist

If you can never protect your budget plans, which looks like Anushka Shetty as a prisoner in Bahubali, then the 50-30-20 rule is your Mahendra Bahubali. According to this rule, 50% of your post-tax income can be used to fulfil your needs. 

The 30% is used for wants, and the remaining 20% is used for loans and investment.

For example, if your post-tax income is INR 40,000, and a monthly EMI of INR 5,000. After using the 50-30-20 rule, your finances look something like this.

Now, even if we set aside INR 1,000 per month for miscellaneous expenses, we can still have INR 2,000 left for investment.

But wait, we are not done yet, there are some low-budget investing and other SIP investment tips that I promise you cannot miss out on.

Tips To Make Your Low Budget Work Smarter

Discussed below are some of the best monthly investment plans and low-budget investment tips for you.

Automate Small Investments (You Won’t Even Miss It): Suppose you bought 3 units of Nindo Homes bond. After collecting 35 returns, your total interest stands at INR 838.08. However, look at the interest payout per month.

The monthly interest is too small to be of any real use. Therefore, what if you could reinvest these small returns?

Enter Grip Infinite, the ambitious investment plan that automatically reinvests your small savings as an SIP into debt mutual funds. Don’t forget to check out the features of Grip Infinite soon.

Use Raises And Bonuses To Top-Ups: Next, various safe investment options for beginners allow top-ups. This means that in case you get any unprecedented or unusual lump sum, say a bonus, you can invest a little extra. 

For example, suppose you earned a bonus of INR 10,000. After keeping INR 5,000  aside for a well-deserving party, you can invest the amount left in your regular SIP.

Say No To FOMO, Yes To Consistency: Investing might sometimes feel like a party at the popular kid’s house, where everyone tries to give unsolicited advice on how to be cool. With your uncle pitching FDs and your friend rooting for crypto, remember that FOMO should not decide your investment. A well-thought-out investment plan based on your unique goals might be exactly what you need.

However, understanding what to do is not enough; what not to do is equally important. Therefore, let's understand some beginner investing mistakes that you should avoid.

What Not To Do When You’re Starting Small

In this world of growing scams and frauds, we should remember how the get rich quick schemes in India are mostly scams. Therefore, to save you some trouble, here are some strategies you must remember as investment and SIP mistakes to avoid.

Quick Money Isn’t Real Money: The high-risk investment mediums, often proposed through dubious means, can offer quick money but usually end up in scams and fraud.

Avoid Quick Money Traps That Burn Your Budget: A high-stakes investment does not automatically indicate a scam. Return is a cost of risk, with risk increasing as return rises. Therefore, especially for beginners, some high-risk investments to avoid might include cryptos, penny stocks, etc.

The ‘Get Rich Fast’ usually gets you nowhere due to it being a scam or having a very high risk. They are like the red-flag crush of yours. Seems pretty from far away!
Therefore, while building wealth does not require you to think big, it does require you to start early and maintain discipline. So, if you are ready for your first step in this world of finance, Grip Invest is ready to hold your hand with a 14% post-tax return.

References:

1. Funds India, https://fundsindia.com/blog/personal-finance/not-enough-money-to-invest/12071
2. Zomato, accessed from: https://www.zomato.com/mumbai/starbucks-coffee-colaba/menu

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