As we all know that investing in the share market is not everyone’s cup of tea. One must be familiar with the basics of the stock market. Once a person knows about the share market basics. It would be easy to invest in shares and make a profit. Moreover, to buy or sell shares a Demat account is necessary. Well, the stock market investment offers high returns. So let’s move ahead to learn how one can invest in the stock market.
Here you will find how to invest in the Indian Share Market without any hassle. However, a beginner investing in the stock exchange always thinks that it is something like rocket science. But one may not need to worry as this is a very easy and simple process. All you need to catch the drift about the share market basics and make a strategy that fits best to do the stock market investment.
- Stock Market Investment
- Share Market Basics
- Regulation of the Share Market
- Essentials required to start Investing
- How to invest in the stock market?
- Approach to the art of Happy Investing
- Have well-defined Investor Profile
- When to enter the Share Market?
- Analyze the company completely
- Keep an eye on your Investments
- FAQs related to Share Market Investment
- COVID-19 Update | How to Invest in Share Market
Stock Market Investment
Furthermore, some investors make huge profits. The reason behind this is that they know how to invest in the share market from very basics. Also, they have good experience with the stock market. On the other hand, some generate low returns or lose money in stocks. But success always comes after failure. So before investing make sure you know everything about the Indian Stock Market. Click here to know more about it. Many people don’t even know about the stock market basics. Most importantly, having a deep understanding of the stock market leads the foundation for one’s success.
The share market trades with the buying and selling of shares. There are two stock exchanges in India, the BSE, and the NSE, that provide a platform to buy stocks. There are also many companies looking forward to selling their shares for earning profits. In this way, a company sells its share to others through the Indian stock exchanges.
To acknowledge more about the stock market investment. Let’s go with the basics of the share market. Suppose a company wants to expand its business but doesn’t have the required money. So, it can take a loan from the bank but then has to pay interest. On the other side, there is one more way for the same which is legally accepted. A company can issue its shares to the public and asks them to contribute to the company. The amount that was contributed decides the percentage of holding one has in the company.
For example, a person wants to invest in the stock market. And the investment in the share market means investing some amount of money in a company. If the value of a company is Rs. 10 lakhs and you hold shares worth Rs. 1 lakhs, then you will become a 10% partner in the company. Further, when the company earns profit you will also get the shares of it as well.
In short, a share in the stock market is a part of ownership in a company, The investment in the share market deals with the buying and selling of the stocks for the long-term financial goals.
So then it seems like that till here one knows about the basics of the stock market now. Adding more to it, there are the market regulators around India who made a marketplace where investors buy/sell shares of any company listed on the national stock exchanges. Therefore, a new investor has to enter this marketplace for the trading of shares. The companies in the stock markets make deals with the investors through the stockbrokers.
How to choose the stock market for Investment?
There are certainly two types of markets in which one can invest. Firstly, the Primary market, where a company is issuing shares to the public only for the first time under Initial Public Offering (IPO). In the primary market, investors can only instantly buy the shares from the company using an IPO. Afterward, the Secondary market evolves when a company stops issuing stocks via the IPO. The secondary market is a stock exchange where investors can buy as well as sell the shares to other traders also. Thus without giving aforethought, it is clear that one should invest in the stock market if he is fully aware of its basics.
“If you aren’t thinking about owning a stock for 10 years, don’t even think about owning it for 10 minutes.”– Warren Buffet
Prior to start investing in stocks, one may worry about the smooth conduct of the market. The new investor may question the fair regulation of the stock market. There is a regulatory body that makes sure all the transactions are fair and free of any fraud. The Securities and Exchanges Board of India (SEBI) is responsible for controlling the share market. It take cares of all the protection and safety regarding the transactions to all investors.
Essentials required to start Investing
Before moving further, this is to clarify that some essentials are mandatory to invest in shares that include:
- PAN or AADHAAR CARD
- Bank Account
- Stock Broker
- Demat Account
PAN or AADHAAR Card
To invest in India, one needs to have a PAN card or AADHAAR card for authentication purposes. It is also compulsory for KYC (Know Your Client) while opening an account with the Securities and Exchange Board of India (SEBI).
A bank account which will be linked with the Demat account much needed for all kinds of transaction in the share market. Apart from this, a six-months bank statement and the canceled cheque is also important according to the new rules.
Remember, a new investor never visits directly to the stock market to buy or sell shares. The buying and selling of shares only take place via brokers. Brokers are members of the Indian Stock Market who buy or sell securities on behalf of the non-members. They also charge some fee as a commission for the help they will provide.
A Demat account will hold the shares that you have bought. It will also reflect them in your name. Basically, for the trading of stocks, you must require a trading account. In a Demat account, the stocks are held electronically which is a dematerialized form.
In addition to this, one needs a trading account for receiving or transferring shares. To open a Demat account:
- Find a stockbroker enrolled with the BSE and NSE.
- Do the KYC formalities.
- Attach the photocopy of your PAN card as well as the AADHAAR card.
- One personalized cheque of the bank account linked to a trading account must be provided.
- Passport size photographs are also required.
How to invest in the stock market?
In addition to invest in the share market, you need to have your Demat account only then you can invest. The investment process is very easy and simple. You can also invest via online mode.
- First, open a Demat account that should be linked with your bank account.
- Sign in to your trading account.
- Select the share that you desire to buy or sell.
- Make sure you have enough funds in your bank account to buy and shares in the trading account before selling.
- Decide the price of stocks for buying or selling.
- Complete the transaction process by transferring shares or money and receive money or shares once you find a desired seller or buyer.
Approach to the art of Happy Investing
Finally, the time arrives to do happy investing to be able to earn more profit. Hoping that before taking the next step in the share market investment. One is quite confidential about the stock market basics. Although, the process of investing in shares includes a planned strategy. This strategy has some tips and tricks to implement for better results.
Have well-defined Investor Profile
To identify your investor profile make sure you are clear with the following factors:-
Try to figure out what is your investment requirement. Decide your investment goals. Plan the strategy accordingly.
How much risk can you bear? Expand your investment into various financial assets depending upon your risk-taking nature.
Stock markets yield high returns over a long-term period. Find the stocks that are likely to match your investment goals. And decide the period to keep investing in that particular stock.
It is recommended to start investing once you are 18 and then do it regularly. Also, purchase the stocks at its lowest price especially when the market is down, and sell when it recovers.
Analyze the company completely
Investing in the share market is like a marathon. So you need to do complete research on the company before planning to invest. You can also look at the financials of the company. It means simply go for the company which is financially stable and can bear any economic crisis in the future.
Keep an eye on your Investments
The investors must monitor their investments regularly. As this will help them in grasping more opportunities to sell and buy stocks for maximizing gains.
To sum up, here is a guide that covered all the doubts regarding how to invest in the share market. So open a Demat account and start investing. Keep in mind that investment in the stock market is highly risky, so do read all the documents related to it carefully.
Well, there is no limit regarding the investment. One can invest with any amount as per requirements. Even the investment in the share market can be started from Rs.100. This is a flexible choice for the new investors as there is no minimum or maximum amount for investing in the stock exchange.
Yes, it is recommended that one should be more than 18 years old to open a Demat account. A trading account is a basic requirement to start investing in the share market. Also for a Demat account, a PAN card is a must for which one can apply only after 18 years.
No, as a trading account is necessary for investing. In the same vein, the stockbrokers are required for trading in the stock exchange. The investors can only invest through the stockbrokers.
Yes, it is, only if a student is 18 years or older and must have a PAN card, then only he can be an investor.
During COVID-19, the investment in the share market is at its peak. As it is always advisable that when the stock market faces downfall that is the best time to invest. In fact, the stock prices decline to 35% during this pandamic. Well once the Share Market recovers, one can sell the stocks to yield high profits.