When it comes for a beginner to Invest in Stock Market lot's of Question arises in the mind of beginners. one of the most important questions that arise in the mind of the beginner is How to Invest in the Stock market? and what we have to do about that? Does it require a large amount of money or we can start with a little money also?
The answer to this question is yes you can start investing in the Stock Market from just Rs500. In this article, we are going to tell you what are the things which you have to do before Investing in Stock Market and How to Invest in Stock Market as a Beginner?
So let's get started...
Here are the Points which we are going to cover in this article:-
A. Before Investing Learn About the Basics of the Stock Market.
B. Things you required for trading in the stock market.
C. How you want to invest in the stock market?
D. How to Invest money in the stock market as a beginner?
E. Don't be an emotional fool in the case of investing in the Stock Market.
A. Before Investing Learn about the basics of the Stock Market.
Generally, beginners get afraid by the name of the Stock Market because of pre assumptions created by the surrounding. generally, people think that people who invest in the stock market suffer from huge losses but that's not the whole truth.
Everything in this world has its pros and cons. You can make a very good amount of profit from the Share Market. But for that, you need to first study about basics of the Stock Market.
Tip's for Beginners...
1. The First and the Most Important tip is that you should buy shares at a low cost and sell them when it's price go high.
2. The second tip is you should be aware of what to buy and what to not buy by the proper analysis.
3. The third and the last tip is there should be so much understanding of when to buy and when to sell the shares.
You can know more about the stock market in detail through some of these great books written by some of the great personalities who are experts in the stock market. These books can help you to clear all your basic concepts related to Stock Market and provide you in-depth knowledge.
=>The Intelligent Investor: The Definitive Book on Value Investing, by Benjamin Graham.
=>A Random Walk Down Wall Street: The Time tested strategy for the successful investor, by Burton Malkiel.
=> The Essays of Warren Buffett: lessons for Investor and manager, by Warren Buffet.
B. Things you require for trading in Stock Market.
For trading in the stock market, the most important thing which you required is a Demate account and Trading account. Documents that are required for opening a Demate account and trading account are:-
1. Bank account
3. Adhaar card
4. PAN card
5. Bank Statement
6. Personalized cheque.
Let's get to know What is Demate account and Trading account and how does it work...
1. What is Demate account and Trading account and it's working?
Now a day's trading and investing in shares takes place online. For trading and Demate account, you get a proper login I'd and password through which you can securely access your Demate and trading account anywhere with the help of the Internet.
The shares which you have bought are all stored in an online Demate account. the demate account is basically for holding the shares. without a Demate account, you can not hold the shares. the Demate account is linked from the bank account and trading account.
The buying and selling of shares all these processes take place through an online trading account. the online trading account is for the trading of shares in the share market.
If you want to purchase a share before that first you have to transfer money from your bank account to your Demate account and after that, with the help of a trading account, you can purchase the shares. the money got deducted from your Demate account and the share gets deposit. The opposite process takes place in the case of selling the shares.
2. Methods of opening a Demate and Trading account.
You can open Demate and Trading account with the help of two methods.
a) Through Banks
You can open your Demate account and trading account through banks. For eg. SBI, HDFC, ICICI, etc. if you open your Demate and Trading account in the bank in which you already have your bank account then the process becomes faster because they already have your details. Banks like HDFC and access bank do not charge for opening a Demate account but other banks can take the charges.
If you are opening your Demate account and trading account through banks make sure to compare the (AMC) Annual Maintenance charges and Brokerage charges. generally, Banks have a high Brokerage rate.
b) Through Broker
Generally, there are two types of brokers:-
i) Full-service broker: Full-service Broker provides you lots of facilities like investment in equity, commodity, mutual funds, etc and trading platforms, trading tips, etc. So these brokers also have high charges.
Some of the examples of full-service brokers are Angel Broking, Share Khan, Motilal Oswal, SMC, etc.
ii) Discounted Broker: If you are a beginner this can be a good option because it has low charges but the services are also less as compare to Full-Service Broker.
Some of the examples of Discount brokers are Zerodha, Fyers, up stocks, Samco, Groww, etc.
C.How you want to Invest in the Stock Market?
As a beginner in learning about Stock Market, you should know in how many ways an investment or trading can be done in Stock Market and which method is perfect for you. Trading is done in four ways in the stock market depends upon the period.
Which trading style would be best for you depends on your personality, your knowledge, and how much time you have to invest in that trade. To become a successful trader in the stock market, you have to analyze your psychology very well and according to that, you have to choose the best way of trading for you in the stock market.
So let's get to know about the four main ways of trading In the stock market and how does it work:-
1)Intra Day Trading
Intra Day Trading is trading in which the trade is completed on the same day i.e you bought the share on the same day and sold it on the same day. Intra Day Trading is Normally done by the retail traders of the stock market.
This trading is the riskiest and aggressive type of trading. Intra Day Trading is only for those who can give enough time to regularly task the movement of the Share Market.
Intra Day Trading is not for beginners. You get your profit and loss in the Intraday on the same day and the risk is only for one day. Brokers also provide margin money if you want which is the money provided by the broker as a loan for one day.
In the case of margin money, you have to complete the trade on the same day and return the margin money otherwise at the end of the day the broker will sell your shares no matter it is profitable or not and the broker just recover his margin money which he has given to you. the profit and loss are not included in the margin money.
2) Swing Trading
Swing Trading is a type of which is completed within a few days or weeks. This trading is similar to Intra Day Trading. the difference is just of time gap which is of few days or few weeks in Swing Trading.
Swing Trading is a very popular trading system and it is also known as trading king. In Swing Trading, you can wait for your profit targeted price and in this way, you can minimize your risk as compare to Intra Day Trading and maximize your profit.
Swing Trading is best for those who are part-time traders. In this, you do not have to be fully focused. In this trading, you do not have to be fully focused like Intra Day Trading. Swing trading provides higher returns as compared to Intra Day Trading and minimizes the risk.
3) Short Term Trading
When a trade is completed in few weeks or few months then it is called Short Term Trading. Short-term trading is an active trade investment and you have to properly keep an eye on your investment and as soon as you get your targeted price, then you should close your trade.
If you can do your trading in Short Term Trading by proper research then you can earn a good amount of profit in Short Term Trading.
4) Long Term Trading
Whenever you invest in stocks for a long time and this time can be from 1 year to 5 years or more, it is called Long Term Trading or Long Term Investment. Profit from the growth of the company, dividend, and bones these are the main attraction of the Long Term Trading.
The profit of long-term trading is you do not need to analyze the daily report of the stock market and you also get the profit of the dividend, If you invest in a company whose future growth prospects are very good, then you get a tremendous return on your investment.
D. How to Invest money in the stock market as beginner?
These are the 7 best investment tips for Beginners to pick great stocks:-
1. Always check the companies track record that no financial fraud has been previously alleged on them by the government bodies like RBI, Stock exchange, etc.
2. especially if you are a beginner then chose the companies of a very reputed owner, in this case, your money will be safe.
3. Always choose the low Debt companies. the more the Debt-free company remains the less the bankrupt chances will remain and your investment will be safe.
4. Always check the sales and profit growth of the company. If the sales and profit both are increasing simultaneously then the company is considered as a good growing company and you can invest your money.
5. You should always check the Return on Capital of a company before investing because this will show that the business is good or bad. Return on the capital show's the profit margin on the total investment that has been done on the business.
6. Always check the customer satisfaction of the company which will show that the company is satisfying their customers or not. If the customer satisfaction of a company is good then the company will grow in the future.
7. Always think like an Angel Investor and compare between the two companies that how much return a company is giving you when you invest a certain amount of money and pick that one which is giving you the highest return on your investment.
So here are Some of the tips for Beginners which will help them to learn how to invest in the stock market.
E. Don't be an emotional fool in case of investing in the Stock Market.
If you are a beginner always keep control of your emotions Don't be an emotional fool in case of investing money.
The Best thing about this market is you do not need a large amount of money to invest, many peoples get scared while entering the stock market because they think that it requires a large amount of money to invest but that's not the real truth you can start investing from Rs500 only. So Don't make pre-assumptions about the Stock Market until you get to know about it in detail.
The most important thing which you need to know about Stock Market is everyone does a mistake in Stock Market during their initial days due to fear, nervousness and sometimes due to overexcitement. So don't invest that amount of money during your initial days which can affect your financial status. Start your journey from small investments.
As a beginner when you are doing your first investment that case two things can happen either profit or loss. In case of profit don't be so overexcited and don't predict yourself as a stock market king because it can be your luck also.
So keep control of your emotions because overexcitement can lead to take wrong decision in the future which will lead to high losses.
In case of loss generally, people get depressed and demoralized and think that Stock Market is gambling and this thing is not for us and they just stop investing forever in the stock market. No, don't think like that always focus on learning things and get as much knowledge you can because apart from luck if you want to succeed in this market, you should have proper knowledge about how to invest in the stock market because luck can help you only once and twice but your knowledge always help you to grow in the stock market.
If you are going to start investing in Stock Market as a Beginner "Best Of Luck" for your journey.
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Hope this article added some value to you...