Do you want to start investing in stocks but are afraid of how to do so? This is a frequently asked question, so don’t be concerned. We are here for you.
The stock market is an ever-expanding and complex field. Its intricacies have been mostly overlooked by the general public, which often considers it similar to gambling.
However, the stock market has incredible potential to grow your money if you understand it and make wise investments.
Here is a simple guide on how to start investing in the stock market, so you can take full advantage of the growing economy.
How to start investing in the stock market?
The stock market has a high potential for profit, making it an excellent place to begin investing. Additionally, you could even trade a variety of financial assets, such as shares, securities, etc., on the stock market and make big profits.
Getting started with the stock market initially is challenging, especially when you are a newbie and are completely unfamiliar with the financial terms.
Don’t worry; here’s a complete guide on how to start investing in the stock market.
1. Choose a Stock Broker
You must select a broker that fits your investment objectives, preferences, and requirements if you want to generate profits. Choosing the finest online stockbroker for your requirements, particularly if you’re an inexperienced investor, might make the difference between a fascinating way to earn money and a frustrating source of regret.
There are many brokers in the market, like Zerodha, Groww, Motilal Oswal, etc. When choosing a stockbroker, there are several things one must take care of like brokerage charges, margin limits, trading segments, etc.
2. Get a pan card
To start investing in the stock market, you need to get yourself a PAN card. Entering the market is not possible without it. A Pan Card is required for taxation and other legal procedures. If you already have one, then you can proceed to the next step, but if you don’t, then start your application now.
You will require three fundamental papers to get a PAN card: evidence of identification, proof of residence, and confirmation of birthdate.
3. Open a Demat and Trading Account
A Demat And trading is a means of holding assets such as equities, ETFs, bonds, sovereign bonds, IPOs, etc. All these monetary assets are supposed to be secure, and a depository account makes it simple to handle and maintain them.
To purchase and sell shares on stock exchanges, one needs a trading account. You can buy and sell stocks thanks to the connection made by your trading account between your account and your Demat account.
An electronic trading account makes it easier for you to have access to several stock marketplaces.
These are the fundamental steps to start investing in the stock market. Now let us understand how to buy stocks and execute buy orders.
How to buy stocks?
In today’s era, everything is online. Gone are those days when people use to stand in the hot sun to buy shares in physical form. Here’s a step-by-step guide on how to buy stocks from an online stockbroker.
Step 1: Sign in to your Demat account which you have opened to hold stocks as mentioned above. Do this with the help of a web application or website of your stockbroker.
Step 2: Research and select stocks, you would like to invest in.
Step 3: Have enough balance in your account to execute the buying order of the shares.
Step 4: Specify the number of units and make the purchase.
And you are good to go.
Once you have a seller who is ready to sell the shares of the company you want, your buy order will be executed. Remember, our market works on the T+2 model, so your transaction will be completed in the next 2 working days.
To understand the working days model of stock market, read this article.
You will receive your shares in your Demat account simultaneously.
Factors to consider before investing in stocks
Investing in the stock market seems to be an exciting task as it’s about growing your money. However, there are some factors you need to consider before investing in stocks and getting started with the stock market.
- Set aside an investment budget
A sustainable budget lets you meet your needs with your salary alone. Having an income that exceeds your living expenses will help you save for the future and invest some of it too. However, there are cases where a budget is not enough, and in such cases, it is good to have a plan for investments as well.
You must have an investment budget that is 10 to 20% of your total income. The investment budget can differ from person to person as per their net worth.
- Investment Goal
Setting financial goals that align with your desires and objectives is the best way to grow your money and accumulate wealth. It’s crucial to have an investment goal in order to invest consistently.
The goal can be anything like buying a house, going on a foreign trip, planning a wedding, or just growing money and making profits from the stock market.
- Portfolio Diversification
Once you start your investment journey, it’s important to keep your portfolio balanced and diversified. Spread your investment across different growing sectors. Buy stocks in those booming sectors of the market with proper research. However, you need to make sure that you don’t over-diversify your portfolio.
Learn more about portfolio diversification here.
Learn Stock Market
Before you start investing in stocks, it’s important to know to learn about the stock market and understand how things work. I am not telling you to be an expert or take some courses but it’s crucial to Know the fundamentals of the market. Read on Introduction to the Stock Market – Stockoholic (thestockoholic. co)
I hope you guys find this post helpful. Let me know in the comment below, when are you starting your investment journey in the stock market.