Hi future investors, today we are going to discuss how to start investing in the stock market. The stock market is an investment platform that brings a huge amount of investment opportunities for its disciplined and well-learned investors. It helps them achieve large returns on their investment.
Your willingness to learn will decide your stock market journey. We are here to guide you and make your investing journey smooth and convenient. In just 3-5 mins of reading this article, you will have complete knowledge of how to start investing in the stock market.
Here we will cover all the basics that a beginner should know before he/she starts investing in the stock market.
How to Start Investing
In order to invest in the stock market in India, first of all, you need a Demat Account.
To open a demat account online, the essentials are:
- Bank Account
- PAN Card
- AADHAAR Card and
- A Broker
The main thing which is most important is Choose a Broker who allows you to invest you to the Stock Market.
There are 2 types of Broker in India.
- Full-Time Broker
- Discount Broker
Discount Broker are more popular now a days in India as their account opening fees is less or some are free. Also their broking charges are less than the full time Brokers.
So you can visit our page “Demat Account” where we discuss about India’s top 3 discount brokers with the comparison.
After your successfully account opening, now you are ready to invest or trade.
Essential Things Required to Start Investing in the stock market
SET AN INVESTMENT GOAL
It’s important that your investment goals are defined before you start investing so that you can take decisions according to your goals. Know what you want from investing. Is it passive income? Or is it higher returns? Maybe a specific goal? Just have a goal with a time frame. This decision should be taken keeping your financial condition in mind including your debts, expenses, etc.
GET SOME KNOWLEDGE BEFORE START YOUR JOURNEY
Learn some basics of the stock market and the patterns that are to be used to invest by reading some books, taking online courses, etc. Keep continuing with your education for the stock market and try to understand the psychology of the stock market.
FIND THE SECTOR & THE STOCKS TO INVEST
Select a particular sector according to your knowledge which has opportunities to prosper and study the companies in it that you understand, check their leadership their vision for the future, its debt, govt. policies for that sector and many other factors that impact the growth of the company. Check the financials of the company and analyze the past of the company.
DIVERSIFY YOUR PORTFOLIO
Create a diverse portfolio by investing in stocks of different sectors and different categories. Don’t invest all of the spur capital in just one stock or in one sector.
Suppose if you invest in two stocks of the aviation sector for e.g.jet airways and spice jet. Now if the aviation sector faces a recession then both of the stocks will face loss. So it is important that you invest in different potential options.
CONTINUE YOUR EDUCATION
Keep gaining knowledge from different sources and gain experience from other people and your past actions so that you can predict in a better manner. Keep one thing in mind that learning is important to be a successful investor.
HAVE AN EXIT PLAN
According to your thorough research and market, the scenario knows the proper time to exit any of your deals. While making this plan you have to keep your greed and fear aside and work on facts. Set a goal of 30-40% in a stock in Short term basis & exit whenever it achieved. Or if you buy a stock base on their low PE, so after a certain time when stock grows & you see that PE is now very high then you can think about the exit.
If your goals are met then you can happily exit the stock. If the stock has fallen below your risk management level then you can exit the stock and move to safer investment options.
SOME TIPS FOR BEGINNERS
START WITH SMALL CAPITAL
Do not put all your money in the beginning. Start with small and slowly increase your investment as your knowledge grows. I think at least 5k is good to start.
DON’T FOLLOW THE CROWD
We advise you to invest in facts and fundamentals instead of blindly following news and other rumors. Big players are spread many rumors where beginners are trapped. Actually when someone loses money then only one can make money.
Patience is the key to successful investing. The more patient you are the greater will be your returns. Without patience, you can’t survive in the market.
Make Investing a habit. Keep investing regularly to make big returns based on your increasing knowledge whether it be with the big amounts or with small amounts.
TAKE HELP FROM EXPERTS
Take some knowledge and help from an expert who has good experience in the stock market. They can help you a lot in investing. Don’t need that person will be someone closed to you or your relatives. For examples, I follow “Warren Buffett”, the god of Investing. So if yo also want to follow “Warren Buffett” then you can read books about him, watch interviews, follow his quotes.
You can check our article “Ways to invest like Warren Buffett” to understand his investment strategies.
DON’T BE GREEDY
Stocks are not to be considered as lottery tickets. You need to have control over your greed. Greed can make you lose money.
Think about Long Term
Have you heard about someone who become rich in a stock time of period through investment? Investment is a game of the long term. Can lose your whole money if you want to rich overnight.