Think you need thousands of rupees to start investing? While it’s true that finding the right small-amount SIP is challenging due to the overwhelming number of options, the barrier to entry is lower than you think.
But here’s the secret: you can actually start building wealth for the price of two pizzas—just ₹500! Below, I provide a detailed guide on the five best mutual funds suitable for a ₹500 monthly SIP.
Ultimately, our goal is to highlight a core financial truth: starting early with a small investment outweighs waiting to start big. This principle is known as the power of compounding.
Why Start a ₹500 SIP?
A ₹500 SIP acts as a powerful starting block for your financial journey. It allows you to benefit from market-linked returns and the power of compounding without needing a large initial capital. It’s a low-risk, high-discipline way to begin wealth creation.
Here are the key reasons to start a ₹500 SIP.
- Affordability: ₹500 is a small, manageable amount that most people can easily set aside monthly without straining their budget. This low entry point makes investing in mutual funds accessible to students, young professionals, and anyone with a moderate or fluctuating income, ensuring you can start early.
- Rupee Cost Averaging: When you invest a fixed amount like ₹500 regularly, you automatically buy more units when the price (NAV) is low and fewer units when the price is high. Over time, this disciplined approach averages out your purchase cost per unit, mitigating the risk associated with investing a lump sum at a market peak.
- Habit Building: The commitment to a small, regular investment of ₹500 creates a consistent habit of saving and investing. By automating the deduction, you treat the investment like a mandatory expense, prioritizing your financial future. This discipline is the foundation for increasing your investment amount as your income grows (via a step-up SIP) and achieving long-term financial goals.
Here are the Best Mutual Funds under ₹500 SIP.
Nippon India Small Cap Fund
Category: Small Cap
- Min SIP: ₹100- ₹500,
- Risk Profile: High,
- Why it fits: Consistently one of the highest return generators in the small-cap space over 5-10 years.
HDFC Mid Cap Opportunities
Category: Mid Cap
- Min SIP: ₹100,
- Risk Profile: High,
- Why it fits: A proven long-term performer with a massive AUM, indicating high investor trust.
SBI Contra Fund
Category: Contra (Value)
- Min SIP: ₹500,
- Risk Profile: High,
- Why it fits: A contrarian bet that has outperformed recently; good for diversification.
ICICI Prudential Value Discovery
Category: Value Fund
- Min SIP: ₹100,
- Risk Profile: High,
- Why it fits: Focuses on undervalued stocks; tends to be less volatile than pure small caps.
Bandhan Small Cap Fund
Category: Small Cap
- Min SIP: ₹100,
- Risk Profile: High,
- Why it fits: A strong contender in the small-cap space with a very low entry barrier.
SBI Large & Midcap Fund
Category: Large & Mid Cap
- Min SIP: ₹500,
- Risk Profile: Moderate-High
- Why it fits: Offers stability of large caps with growth of mid caps.
How to Choose the Right One?
When choosing a fund for your SIP, always keep these point in mind.
- Risk vs Reward: Small caps give high returns but fall harder during crasher, Large caps are safer.
- Expense Ratio: Lower is better (Direct plans are cheaper than Regular plans).
- Time Horizon: Only invest in these equity funds if you wait for 5+ years.
Author Note :
You don’t need to be rich to invest, but you need to invest to be rich. Start small, stay consistent, and watch the magic of compounding unfold. And also don’t forget to give your feedback in comment section. Thank.
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