What is the Minimum Sum Required to Buy Shares in India?

The amazing beauty of investing in shares is that you can start with ridiculously small amount that is not possible with other classes of assets like real estate and gold. Let us list the benefits:

1. The unit price or cost or sum required is tiny.
2. There is no minimum quantity to be purchased (MOQ) stipulation (fractions are not allowed, of course).  One unit or any multiple can be bought.
3. The transaction costs like taxes, brokerage, and annual maintenance charges are reasonable affordable.
4. Investments are highly liquid. In case of an emergency one may sell instantly and realize the money within a week.

In India shares of a good number of respectable companies are available for less than Rs.35 ($0.50) apiece.  There are two candidates in our own educational ‘Portfolio 2K15’ itself that meet this criterion:

Less than Rs.50 ($.0.50) Stocks

If we were to think about mutual funds or SIPs one can invest as low as Rs.50. Please also read 'What is the Minimum SIP Subscription Amount and Best SIP?'.

All in all in my opinion one should be able to complete all the necessary things required like opening a trading account, opening a demat) account (account for holding stocks in a dematerialized form) and linking an already existing account with the trading/ demat account for receiving dividends, within Rs.500 to 1000. If you do not have a bank account, you may require another Rs.1000 to 5000 as a minimum deposit or balance as per bank’s norms.

However, for the investments to be meaningful and be able to give you ‘Financial Freedom’ you must consider investing larger amounts, every month, for about forty years. Following picture depicts the net wealth you may expect to accumulate after 40 years when you invest various amounts:

Comparative Investment Results for Various Monthly Investment Sums

In conclusion one can invest in shares for a sum as low as Rs.28 and in SIP Rs.50 and slowly and gradually build a formidable wealth from such humble beginnings.

What are the Hurdles to Invest and Earn Dividends from Foreign Markets?

Following are the general reasons why people prefer to save and invest and earn returns and dividends from their own country:

1. Familiarity and ease of transaction: People are more familiar with the general economic environment, laws, taxation and so many other related aspects prevailing in their own country. Even the service providers like banks, stock brokers, insurance agents and so forth are also well versed with the systems of the native country. So it is more easy to transact in one own country.
2. Legal Restrictions/ Hurdles: Many countries, including our own India till recently, have legal restrictions in investing abroad, primarily to conserve foreign currency reserves. Even in India until a few years ago there were restrictions, which were eased. Unless revised subsequently, Indians were permitted to invest only up to US$.2.50 lakhs per annum abroad. Even when this is legally permitted, because of political sensitivities surrounding issues like laundering of black-money abroad, even genuine investors may face harassment from various authorities.
3. Costs and Minimum holdings constraints: Once I was seriously exploring purchasing shares in the US, sitting in India. It is quite possible, technically. There are online brokerage firms that permit you to buy on US stock exchanges, but there were many minimum criteria that were impractical for a small investor from India. Suppose there is a minimum trade fee of $10 per transaction it translates into a whopping Rs.670 flat for one transaction that is totally unaffordable. There are many minimum criteria like ledger folio charges, minimum investment amount and so on which make it practically unviable for small Indian investors.

Having said this, Goldman Sachs, a foreign mutual fund operating in India is offering certain limited access to overseas markets through their 'Exchange Traded Fund (ETF)' products. Please see the picture below.

Similarly, a few other funds also may be offering avenues for limited investing abroad.

In conclusion, it is not impossible for investors to make investments and earn dividends and returns from overseas markets, but a few practical hurdles restrict scale of such transactions.