In all the previous articles I was always talking about investing in the stock market. Lots of friends & other peoples asked me how to start investing in the stock market? Finally, this article helps you to get to know how to start investing in the stock market.
We all know what is stock market & how it works in India. If you are new and do not know yet, then you must read my other articles or click below links:
These articles will let you know the stock market in India, basics of the stock market. Also, it helps those students or newbie who want to get a new career option in their life.
In India, many people already know about the Stock market but they are afraid to enter it. The main reason is the volatility nature of the Stock market. People also do not know how to get started.
This article is only for those peoples who are new, brave in nature, and can take risks in their life.
From here, I do not know if you are going to read further or not. If yes, then you should make your mind that, investing is a long-term game, you should have patience. If you do not have patience, please stay away, and do not read further. This article is not for you.
“You get recessions, you have stock market declines. If you do not understand that is going to happen, then you are not ready, you won’t do well in this market” – PETER LYNCH
If you are ready, you just need to follow below simple steps to get your money into the market.
PREPARE YOUR INVESTING APPROACH IN THE STOCK MARKET
When you start investing your money into the stock market you must make an approach. i.e.
- Either you can invest by your own,
- You invest your money with the help of full-service brokerage
- Or, you need any advisory manager.
All these options have involved the pros and cons.
If you invest your own, you must study your own about company business, its financial condition, financial reports that the company publishes on a yearly and quarterly basis.
If you take the help of any full-service brokerage, they help you to invest your money in a stock. But these brokerage firms do not push you to invest for the long term. They generally help in day to day trading only.
If you take the help of any advisory manager, they help you to invest in the long term. But they will charge from you whether you are in profit or not. The same case is with full brokerage firms as well.
That is why I always prefer to invest my own. Read company financial reports, company business models that also help you to understand the actual business and help you to become an entrepreneur.
OPEN DEMAT ACCOUNT FOR INVESTING IN THE STOCK MARKET
After you prepare your investing approach, you can now open a Demat account for investing in the stock market. You can open an account with the full-service brokerage or discount brokerages.
In India, the demand for discount brokerages is going high. Because they charge less.
The top and the popular discount brokerage is ZERODHA. You can create your account with ZERODHA with few simple steps online. After you submit your documents with ZERODHA they will create your account running in 3-4 working days.
There are a number of discount brokerages available in India through which you can create your account. Few are listed below:
PROVIDE FUNDS IN DEMAT ACCOUNT FOR INVESTING
After creating your Demat account, now is the time to fund your account for investing in the stock market. You can fund your account with whatever amount you want. If you follow the budgeting rule you can add accordingly. At least 15-20% amount must allocate to your savings and investments. If you really beat the inflation rate you must invest.
After funding your Demat account, now you can purchase the shares of any company you want.
Please remember before purchasing the shares you must know the business of the company where you going to invest your money. If you do not check the company business, its background, you may lose your hard-earned money.
If you invest with proper search in that case, just invest in and forget your investments for 5 to 10 years. You just check your investments in between those years weather the company is working well or not.
“The Stock Market clearly values the companies that can deliver disruptive innovations” – STEVE BLANK
KNOW THE DIFFERENCE BETWEEN STOCKS / COMMODITIES / ETF IN INVESTING
Now, while investing through the Demat account, the brokerages show us two different investment options. i.e.
Here, Equity means the shares of the company you want to invest in. And commodities are different from the shares of the company. Under commodities, you can buy or purchase Gold / Silver /Crude Oil / Rice / Other metals, etc.
Both Equity and Commodity market are different but affects the country economic growth.
Here is another option i.e. ETF. ETF stands for Exchange Traded Fund. IN ETF funds, pool bunch of investor money to buy different equity shares. The best examples are Mutual Funds and SIP.
In Mutual Fund and SIP is also a kind of investment in the Stock Market. But I am not clear that the people prefer Mutual Fund / SIP investment rather invest directly into the stock market.
“Mutual Funds give people the sense that they are investing with the big boys and they are really not at a disadvantage entering the stock market”. – RON CHERNOW
START INVESTING & DIVERSIFY
Now, you are ready to start investing. You can now buy any company share that you like.
When you see that you are in profit you can take your money out at any point in time as well. And can invest again in another company share.
Always remember never investing your all amount in a single company. You must diversify your Demat account with different companies, which are good in fundamentals and have good profit growth in the last 5-10 years.
Now, you have a full idea of how to start investing in the stock market. You just need to open your Demat account and start buying shares.
Always remember, if you really want to gain in the stock market, you just invest at one point in time and forget it for the next 5-10 years. Just check investments and company news between these years.
If you want to be a safe investor you can buy every month a small number of shares. Just like SIP investments, you can make your share price average & you may get at least average profit after your investing years.
“I think businesses live longer that are on the stock market” – BRUNELLO CUCINELLI