You can invest Rs 5000 in the share market in 5 different ways in India
- Direct Stocks (long term)
- Intraday Trading
- Option Trading
- Mutual Funds
- ETFs
Depending on your expected return and time commitment you can pick the right option to invest Rs 5000 in the stock market.
- Direct Stocks – Find the stocks that would give 8% to 10% return in 3 to 5 months. Sell the stocks once you get the expected return. Find another stock to reinvest. Stock analysis on the weekend would be sufficient to execute this strategy.
- Intraday Trading – You can start intraday trading with Rs 5000. You can start with a daily profit of 0.5% to 1%. You may need to spend 2 hours daily in the initial days.
- Options Trading – You can start the option buying strategy with Rs 5000 margin with a weekly target of 2% or a monthly target of 4%. You would need to spend weekly 8 to 10 hours on learning options trading. You can check out the list of best broker for option trading in India.
- Mutual Funds – You can invest in equity mutual funds with an expected return of 12% annually. You would need to do one-time research about the mutual funds’ past returns to make the decision.
- ETFs – you can invest in ETFs to invest in index-based investments with an expected return of 12%. This would require the least time in research. You can even start with Rs 500 to invest in the stock market through ETFs.
Our article on how the share market works may help you understand the basic functionality of the stock market. Let’s understand the potential return of each investment option.
| Investment Option | Potential Annual Return |
| Stocks | 20% |
| Intraday Trading | 60% |
| Option Trading | 40% |
| Mutual Funds | 12% |
| ETFs | 12% |
Let’s discuss each of them in detail below.
#1. Direct Equity Investment
Direct equity investment refers to investing in individual stocks of companies listed on the stock market. This method requires more knowledge and research than investing in mutual funds, as you need to select the individual stocks yourself.
As you select the individual stocks yourself, you have control over which companies you invest in. Investing in individual stocks can be riskier than investing in mutual funds, as the performance of individual stocks can be volatile.
Process of Investing in Direct Equity
- Select the stocks you want to invest in based on your research and analysis.
- Open a demat trading account with a broker.
- Complete the KYC process.
- Purchase the stocks you want to invest in through your demat account.
Tips for Investing in Direct Equity
- Conduct thorough research and analysis before investing in any stock.
- Invest in stocks of companies that have a good track record of performance and growth.
- Diversify your portfolio by investing in stocks of different companies and sectors.
If you want to invest in stock market you can check out our research report on top 20 stock brokers in India 2023.
#2. Intraday Trading
Intraday trading refers to buying and selling shares within the same trading day. It requires careful monitoring of the stock market, knowledge of market trends and reading the candlesticks charts. Intraday trading can provide high returns but also comes with high risks. It is not recommended for beginners or those with limited knowledge of the stock market.
Process of investing in intraday trading:
- Open a Demat account with a broker who provides intraday trading services. You can check the list of free demat and trading account opening facility with zero AMC charges.
- Research and analyze stock market trends to identify potential opportunities.
- Buy shares at a low price and sell them when the price increases.
- Keep a close eye on the market and monitor the shares throughout the trading day.
- Set a stop loss to minimize potential losses.
Tips for investing wisely in intraday trading:
- Start with a small amount to minimize potential losses.
- Set a stop loss to minimize potential losses.
- Keep a close eye on the market and monitor the shares throughout the trading day.
- Develop a trading strategy based on research and analysis of the stock market.
If you want to learn the actual process of doing intraday trading, go through our guide on “How to do Intraday day trading in Zerodha”.
#3. Options Trading
Options trading refers to buying and selling options contracts, which give the holder the right but not the obligation to buy or sell a stock at a specific price.
Options contracts can be used to speculate on the price movement of an underlying asset, to hedge against price fluctuations, or to generate income through the collection of premiums.
Options trading requires a deep understanding of the stock market and can be risky. You can also earn monthly income return by investing your 15 lakhs portfolio in option trading.
Process of investing in options trading:
- Open a Demat account with a broker who provides option trading services.
- Research and analyze stock market trends to identify potential opportunities.
- Buy or sell options contracts based on market trends.
- Monitor the market and the options contracts to make informed decisions.
Tips for investing wisely in options trading:
- Start with a small amount to minimize potential losses.
- Develop a trading strategy based on research and analysis of the stock market.
- Monitor the market and the options contracts regularly to make informed decisions.
You may like to read best option trading apps in India.
#4. Mutual Funds
A mutual fund is a type of investment fund that pools money from multiple investors to invest in a portfolio of stocks or other assets. The fund is managed by a professional fund manager who makes investment decisions on behalf of the investors.
There are two types of mutual funds – equity mutual funds and debt mutual funds. Equity mutual funds invest in stocks of different companies, while debt mutual funds invest in fixed-income securities such as debentures, bonds, and government securities.
Process of Investing in Mutual Funds
- Choose a mutual fund that aligns with your investment goals and risk appetite.
- Open a mutual fund account with a fund house or a broker.
- Complete the KYC (Know Your Customer) process.
- Select the mutual fund and invest the amount you want to invest.
Tips for Investing in Mutual Funds
- Invest in mutual funds with a track record of consistent returns.
- Choose a mutual fund that aligns with your investment goals and risk appetite.
- Keep an eye on the expense ratio of the mutual fund.
Read our list of best brokers for mutual funds investment to know about top brokers to cater to your mutual funds’ investment needs.
#5. Exchange-Traded Funds (ETFs)
Exchange-Traded Funds (ETFs) are a type of investment fund that tracks the performance of an index or a group of assets. ETFs are traded on the stock exchange like individual stocks, and their value changes throughout the day based on the performance of the underlying assets. You can also invest in the commodities like gold ETF, and invest in bank nifty ETF.
ETFs provide exposure to a diversified portfolio of assets, which can help reduce the risk of losses. You can diversify your investment portfolio of 1 crore to earn monthly income in India.
Process of Investing in ETFs
- Choose an ETF that aligns with your investment goals and risk appetite.
- Open a Demat account with a broker.
- Complete the KYC process.
- Purchase the ETF you want to invest in through your Demat account.
Tips for Investing in ETFs
- Choose an ETF that tracks a diversified portfolio of assets.
- Keep an eye on the expense ratio of the ETF.
- Invest in ETFs with a track record of consistent returns.
Conclusion
You can start investing in mutual funds, direct equity, or ETFs With just 5000 rupees. Each investment option comes with its own set of advantages and disadvantages, and it’s important to choose the option that aligns with your investment goals and risk appetite.
Remember to conduct thorough research and analysis before investing in any asset, diversify your portfolio, and keep an eye on the expenses ratio.
FAQs
You can monitor the performance of your 5000 rupee investment in the share market by tracking the stock prices regularly and assessing the company’s financial performance. You can also use online tools and mobile apps to track your portfolio and receive real-time updates on stock prices.
If the stock you invested 5000 rupees in starts to perform poorly, it is important to assess the reason for the poor performance. If it is a temporary setback, it may be wise to hold on to the stock. However, if the company’s fundamentals have deteriorated, it may be best to sell the stock and invest in another company.
Yes, you can invest 5000 rupees in the share market through a mobile app. Many brokerage firms offer mobile apps that allow you to invest in the stock market from the comfort of your home.
Yes, there are additional charges such as brokerage fees, transaction charges, and other taxes associated with investing in the share market. It is important to consider these charges before investing.
Yes, it is possible to invest in multiple stocks with 5000 rupees, but it is recommended to diversify your portfolio to minimize risks.
Yes, it is possible to make a profit by investing 5000 rupees in the share market, but it depends on market conditions and the performance of the stocks in which you invest.
Yes, even beginners with no prior experience can invest in the share market. It is recommended to start with small amounts and to do thorough research before making any investments.
Yes, it is necessary to have a demat account to invest in the share market, as it holds the shares and securities that you purchase in an electronic format.
Growth stocks are stocks of companies that are expected to grow at a faster rate than the overall market, while value stocks are stocks of companies that are currently undervalued by the market.
Yes, you can invest 5000 rupees in penny stocks, but it is important to note that penny stocks are highly volatile and risky investments. It is important to thoroughly research the company and its financials before investing in penny stocks.
Yes, you can invest 5000 rupees in blue-chip stocks. Blue-chip stocks are stocks of well-established, financially stable companies with a history of consistent earnings and dividend payments.
Yes, you can invest 5000 rupees in index funds. Index funds are a type of mutual fund that tracks a specific stock market index, such as the Nifty 50 or the BSE Sensex.
Yes, you can invest 5000 rupees in IPOs, but the amount may not be enough to get a lot of shares. It is important to thoroughly research the company and its financials before investing in an IPO. You can also check our report of upcoming IPOs to invest 5000 rupess in IPOs.
The returns on your investment depend on various factors such as the performance of the stock market, the stocks you invest in, and the time horizon of your investment. Historically, the stock market has delivered returns of around 15-20% per annum.
