Best Mutual Funds To Invest With Rs 500

The best thing about mutual funds is that they enable you to invest with very small amounts. There is no other way you can invest with reasonable diversification with an amount as low as Rs 500. SIP (Systematic Investment Plans) of a lot of mutual funds allow min investment with just Rs 500.

Now coming to the topic: Best mutual funds to with Rs 500. Well, first a disclaimer — there is nothing like the best plan. Or it is impossible to find the future best plan because past performance does not guarantee any future returns. So the best way to find the “best” plan is to make a reasonable and intelligent guess based on past performance.

The most important criteria to consider before answering this question: What is your purpose? Based on the purpose we can figure out the mutual fund category that will suit this purpose. The second question then remains — what mutual funds allow me to invest as low as Rs 500.

The minimum limits are typically different for lump sum and SIP. Let’s look at a couple of examples.

Parking your cash

If you goal is to park your cash, you can either consider a liquid fund or an ultra short term fund. There are bunch of funds that have minimum investment as Rs 500 or low. Here is list of some good ones:

ICICI Prudential Money Market Fund Liquid

Axis Liquid Fund Liquid

Reliance Money Manager Fund Ultra Short Term

ICICI Prudential Flexible Income Plan Ultra Short Term

Here are some more Ultra Short Term Funds and Liquid Funds that allow you to do SIP for Rs 500 (however lump sum limit amount is higher)

Franklin India Low Duration Fund Ultra Short Term

Tata Liquid Fund Liquid

Saving for short term

If you goal is to save for a short term goal like buying a car or buying a house within 3 years, short term debt funds are good. I could find only one short term debt fund that allows investment of Rs 500.

Indiabulls Short Term Fund Short Term Debt

However, there are many Short Term Debt funds that allow SIP of Rs 500. Here they are:

Franklin India Short Term Income Plan Short Term Debt

Reliance Banking & PSU Debt Fund Short Term Debt

HDFC Banking and PSU Debt Fund Short Term Debt

Balanced funds

Balanced Funds are good to build a diversified portfolio of debt and equity. And better than buying different equity and debt funds because there is no tax implication on the debt proportion. Balanced funds also give the flexibility to fund manager to change the debt and equity proportion depending on the market situation. There is one balanced fund as of today that allows you invest Rs 500 in lump sum mode.

Reliance Regular Savings Fund — Balanced Option Hybrid Equity

Here are some good mutual funds that you can start SIP with just Rs 500

Franklin India Balanced Fund Hybrid Equity (Balanced)

DSP BlackRock Balanced Fund Hybrid Equity (Balanced)

SBI Magnum Balanced Fund Hybrid Equity (Balanced)

Tata Balanced Fund Hybrid Equity (Balanced)

UTI Balanced FundHybrid Equity (Balanced)

Diversified funds for long term

Diversified funds are good to start investing in equities. Because of flexibility of investing all type of companies irrespective of size, fund manager can generate better risk-adjusted returns. There is only one fund with minimum investment of Rs 500 in lumpsum

Quantum Equity FoF Fund Diversified Equity (Multi Cap)

However, For SIP there are many good mutual funds to start with Rs 500

Franklin India High Growth Companies Fund Diversified Equity (Multi Cap)

SBI Magnum Multi Cap Fund Diversified Equity (Multi Cap)

Kotak Select Focus Fund Diversified Equity (Multi Cap)

Saving Tax

Great way to save tax on your hard earned money. Under section 80C, you can invest upto 1.5 lac tax free. These funds have lockin of 3 years unlike 10 to 15 years for PF. In addition you get to participate in equities — in long term equities are performing better because of growth of our country.You can start with almost any ELSS (Tax saving funds) with Rs 500 (both Lumpsum and SIP). Here are some good funds for tax saving:

DSP BlackRock Tax Saver Fund ELSS

Reliance Tax Saver (ELSS) Fund ELSS

ICICI Prudential Long Term Equity Fund (Tax Saving) ELSS

Franklin India Taxshield ELSS

Axis Long Term Equity Fund ELSS

Birla Sun Life Tax Relief 96 ELSS

Equity Funds with Rs 500 SIP

Although there are ver few equity funds that allow lump sum investment of Rs 500, there are many good ones that allow SIP for Rs 500.

Quantum Long-Term Equity Fund Large Cap

SBI Bluechip Fund Large Cap

L&T India Value Fund Mid Cap

Franklin India Prima Fund Mid Cap

DSP BlackRock Small and Midcap Fund Mid Cap

Franklin India Smaller Companies Fund Small Cap

Reliance Small Cap Fund Small Cap


In this article, we covered various options to get started with mutual funds with as low as Rs 500. At the moment it appears that the choice is limited for lump sum investments. However, for SIP investments, there are many good funds available for all your needs. Mutual funds companies are working to reduce the min investment to increase the investor base. Some schemes allow an even lower amount for their systematic investment plans (SIP).

Disclaimer: All data is as on the date of publishing (Jan 25, 2017)

Originally published at on January 25, 2017.