How to start investing in stock market - Check beginners' guide for share bazaar
It is true that people incur losses in equity investments, but it is also a fact that people have made huge stacks of money in Indian stock markets by applying their knowledge, news sense, appropriate planning and what not. Therefore, it is not that simple to attract money by money but it's not an impossible task as well.
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Sr. Technical Research Analyst, Rohit Singre, LKP Securities told Zee Business Online, "A new investor should always prefer investing with mutual funds at the initial phase, however once, they get to know, how the market operates, they can go for investments on their own." Some consider it as a highly risky, difficult to understand and technically complex world to get in, and some think of it as an overnight route to double their money.
It is true that people incur losses in equity investments, but it is also a fact that people have made huge stacks of money in Indian stock markets by applying their knowledge, news sense, appropriate planning and what not. Therefore, it is not that simple to attract money by money but it's not an impossible task as well.
Here is a step by step guide on how you can start investing your money in stock markets today:-
7 steps to start investing in equity markets: It all begins from opening a demat account
1. Open a demat account: How to open demat account for share market?
The first step is to open a de-materialised account with a registered security broker. There are number of stock brokers available in the market like, Sharekhan, Zerodha, Motilal Oswal, HDFC Securities, ICICI Securities, Axis Capital etc. Almost every bank in India provides stock broking services under a subsidiary company.
One should always choose the right broker after comparing all the rates, service charges, plans, offers and taxes among others. Make sure to complete all the required documentation and procedures before starting operating your account.
The broker will link your bank's savings account to your de-mat account for the automatic debit and credit facilities after trade settlements. Customer will be provided with the unique username and password (changeable) to place his\her trades accordingly.
2. Choose your investing style:
The next step is to choose your investing style, whether you will invest your money on your own intellect and feeling or you will seek an expert's recommendations. If you know how to analyse stocks, different companies, various sectors, you are good at calculations, know a bit about financial theories and studies, you can choose to invest on your own.
"An Investor who is new to equity, should always prefer investing on recommendations of a fund manager with an experience of over 15 years in the market," Singre added.
However, if you are a new investor and would seek advice to go ahead, you should approach an expert. You can go for an equity expert or the recommendations by industrial experts and professionals. You can also ask your broker to advise on your right picks. In this case, you can also choose to invest in mutual funds or SIPs, as they are the pooled equity investments done by registered financial companies.
3. Set a periodical budget:
An investor should set a timely budget as per his\her goals, surplus funds, savings, income, expenses, etc. You cannot just pour your money in an unorganised manner, surplus income after all the needful expenses is always the best way to start with. Prepare monthly, quarterly, yearly budgets to allocate a fixed amount of money to invest in equities.
4. Don't copy others: What you must avoid in share trading
One should never follow other investors or take suggestions by friends and relatives, when investing in equities. There is no perfectionist or a predictor who can assure you the returns in future. The strategy which proved worthy for someone, might not be a right one for you to consider due to the difference in goals, time, place, amount of money, vision, etc.
Therefore, make your own strategies, trust your own feelings and go with your own vision to get the best in future.
5. Do the research work: Gear up for share trading
Appropriate research work, reading about different companies, following the related news, analysing the financial figures, studying historical graphs, seeking an expert's advice, making a right decision etc. are all the pre-requisites of equity investments.
"If an investor has spent a good amount of time understanding markets, or has invested in mutual funds earlier, can go for self investment strategy. For a long term investment, they need to learn or read fundamental studies, while for a short term investment, they need to read technical theories,'' Singre explained.
Therefore, any investment without a perfect homework will not be complete or fruitful in future.
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6. Put in your money in share market
After following all the above steps, an investor can put in his\her money in the respective stocks or fund options. Now it is a right time to buy suitable quantities of a selective stock or fund as per your pre-decided budget.
7. Setup your vision:
One should decide his\her vision before settling a trade or investment. Money takes time to grow, however some stocks could be risky to hold long, therefore an investor should have a set vision for each investment after all the research work.
The investor should set a vision, whether he\she wants to hold positions for long terms or settle it in a shorter duration.
"If an investor has a long term vision for any of his preference, he\she needs to analyse all the fundamental aspects of the company, while in case of a trading, an investor need to learn the technical practices," Singre advised.
