How to invest in the share market?: A Step by Step Guide for beginners

How to invest in the share market?: A Step by Step Guide for beginners

The stock market has been the most fascinating topic for us since our school days. Whenever we hear that somebody is earning through investment in the stock market, we get a little curious about what the stock market is and how to invest in the share market ?

You don’t need to be a billionaire to start investing in the stock market. You can start investing even with very little money or maybe with just your savings. You just need to rely on yourself. No one is born with the talent to invest. The giant investment bankers used to be a layman once. They have become proficient through their hard work and curiosity to acquire knowledge about the stock market. The human brain is miraculous. It can do wonders if used in the right direction.

As a beginner, the process of investment and trading in the Indian stock market can seem to be a bit complicated. But if you learn the basic principles of this market,  you could be able to make investments. It requires you to open certain accounts and fulfill some formalities. If you are looking to invest in the share market, you don’t need to look any further. You can go through the following process and start investing in no time.

1. Why you want to invest?

The first thing you need to ask yourself before investing is that why you want to do so? If you can answer this question, you could surely decide your investment goals. Once your goals are decided you already get a destination. The only thing left to do now is to trace your ways to it.

2. Gain some basic knowledge

Make sure that you possess the skills and knowledge to manage your portfolio. Make efforts to gain an understanding of the share market movements, the significance of stock market indices as well as the features and risks involved in various kinds of securities.  As an investor, you need to make decisions regarding which stock to choose, how to deal with market ups and downs, and how to allocate your funds in various securities to form your portfolio. For being able to take such a decision, you need to have the required skills.

3. Choose where you want to invest?

Once you have decided on your financial goals, you may need to select the particular company or security you wanted to invest in. you may choose such a company or stocks based on their market performance, your income goals and risk-taking capacity, funds available for investment, market conditions, etc.

4. Complete the formalities

The stock market is an organized marketplace for dealing in securities. For getting the status of an investor in the stock market we need to fulfill certain formalities. These formalities include:

A. Obtaining a PAN card

Nowadays, every citizen of India, who is above 18 years, needs to have a Permanent account number [PAN]. The PAN number mentioned on the PAN card is a necessity to involve in any financial transaction in our country. If you are not from India, you may fulfill the formalities required in your country to trade in the stock market.  

B. Hiring a stockbroker

The stock market is not like the general market where you can directly buy and sell whatever you want. There are some specific people who are authorized by SEBI to buy and sell securities in the stock market. You can perform your activities in the stock market through them only. For providing this service, they charge some commission in the form of brokerage. you should select your stockbroker on the basis of the level of service they provide to the investors. You should rather choose a broker with a flat brokerage rate instead of the commission on a transactional basis.

C. Opening a Demat and trading account

 Nowadays, shares are not given in the physical form to the holders. They are provided to the investors in dematerialized form. For this purpose, the investors need to open a Demat account. Whenever you purchase or sell the shares, it is credited to and debited from the Demat account. Also, they are needed to link a bank account to their Demat account. At the time of sale, the amount is credited to your bank account and the number of shares is debited to the Demat account, and, at the time of purchase, the amount is debited from your bank account and the number of shares is credited to the Demat account.

5.  Start buying and selling

After the completion of the formalities, it the time to actually start buying and selling shares. No one can take care of your money as you do. It’s your responsibility to spend it wisely and invest it in such stocks that could reap maximum returns.

if you want your funds to appreciate, then you should invest in growth companies as they are able to improve their annual revenue faster than the whole market. On the other hand, If you’re after income, then you should prefer blue-chip stocks that generate enough dividends per year for the shareholders.  Bonds can also be a great choice if you want regular income. 

You can also hire professionals for the selection of stocks and for making your portfolio. Brokerage firms often offer model portfolios that are suitable for many profiles. They may provide guidance for your strategy. But in the end, the responsibility for your money lies on you only.

6. Monitor the results and evaluate your portfolio

There is no such limitation on the amount of time you spend monitoring your investments. During trading hours, the movement of investments is just a click away, and you could take some out each day to track the movements of your portfolio.

Many people could recommend such checking in but remember, it could lead to impulsive decisions that you will regret in the future. So I would suggest checking your investments at a certain interval of time. Keep in touch with the recent activities of the economy so that you could stay on pace with the changing economic scenario.

If you follow the process above, you’re likely to avoid mistakes that can lead to unfavorable consequences. You can’t invest successfully without a purpose or without research. It’s your own wealth that is at stake, so you need to be careful while investing in them. Also, only a good researcher can be a good investor.

So what are you waiting for? if you want to invest, follow the above process or one similar to it, and become an investor.

Read More : What is Cryptocurrency? Here’s what you need to know the ultimate guide

References : Stock market-From Wikipedia, the free encyclopedia

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