How to Invest In the Share Market?

A Share market is where share are given and exchanged, has turned into a famous method for money management. With the approach of the computerized age, nearly everybody can partake in the share market and work towards getting returns. While the share market can be a worthwhile investment mode, it is just so on the off chance that you comprehend speculation rehearses. Here is a guide on investing in the stock market for beginners to help you with the same.

How to Invest In the Share Market?
How to Invest In the Share Market?

    What is Share Market?

    The stock market is a platform for exchanges, companies, and investors to list, buy or sell different securities such as equities, derivatives, bonds, mutual funds etc. So, if you are looking to trade only in shares issued by companies, you are investing in the share market. However, if you want to trade using other securities, as well, then you can do so on the stock market. 


    An essential element of the share market is the stock exchange. The stock exchange is a platform that allows for trading company stocks and other instruments. Essentially, stock or security can only be traded if it features on the stock exchange list. The exchange acts as a place that catalogues all the securities that can be traded and facilitate the meeting of stock buyers and sellers. The two primary exchanges where you can trade in India are the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).


    How to Invest In Share Market?

    If you want to invest in stocks, you should keep in mind that there are two types of share markets: primary and secondary share markets.

    Two Types of Market:

    1.Primary Market
    Investments in the primary share market are through an Initial Public Offering (IPO). After a company receives all the applications made for an IPO by investors, the applications are counted and shares are allotted based on demand and availability. To invest in both primary and secondary markets, you need to have a Demat account that will hold electronic copies of your shares. Additionally, a trading account is also important which will help in buying and selling shares online.
    In rare cases, it is also possible for a trader to apply directly from their bank account. IPO application through net banking is made easy via a process that is known as Application Supported by Blocked Amount .

    2.Secondary Market
    Secondary share market investing or trading refers to the regular purchase and sale of shares or stocks. There are a few simple steps to follow before you start investing in the secondary share market.

    Benefits of Short-term Investment and Long-term Investment

    Short-term investment: A short-term investment is when an investor buys securities to sell them within 3-4 months. They allow you to make quick profits in a bull market and enjoy the profits for personal benefit. Here, investors don’t have to hold their money for a long time in the stock market and yet make profits if the prices of the securities increase. 

    Long-term investment: Long-term investment, also called value investing, is when you buy securities to hold them for multiple years. Long-term investments ensure that you mitigate stock market risks as they multiply over time. Such investments provide the best value of securities to the investors as the extended period increases the potential for better profits.

    How to Invest in the Stock Market for beginners?

    Step 1: Open Demat Account
    This is the starting point to invest in the share market. Therefore, before investing, it is mandatory to open a Demat account. Both of these accounts should be linked to a pre-existing bank account for a seamless transaction.

    Step 2: Research and Study the stock 
    Researching the chosen type of investment is necessary to mitigate losses and improve the profit potential. You can research and study the chosen security through newspapers, TV channels or information available by the stockbroker.

    Step 3:Select the price point
    Decide the price at which you want to buy or sell a share. Wait for the buyer or seller to reciprocate that request.

    Step 4:Complete the transaction
    Once the transaction is complete, you receive either shares or money for the stocks that you have respectively purchased or sold.
    Ensure that you are mindful of the duration to achieve through your investments.

    Step 5: Monitor your portfolio regularly
    Once you have invested in a security based on an investment goal, it is vital to monitor the portfolio regularly. Monitoring helps in understanding the performance of your investments, reducing losses and identifying stocks that are doing better for further investment.

    Documents required for Demat Account

    • Identity proof
    PAN card is mandatory (ensure your photo and signature on the card are visible)
    • Address proof (any one of these)
    Passport, driving licence, voter ID, Aadhaar card, or bank account statements for the last 3 months
    • Income proof (any one of these)
    6 months bank statement, net-worth certificate, 3 months salary slips, Income Tax Return (ITR) statement, demat holding statement, or holding report
    • Signature on white paper
    Sign on a white paper and take a picture of it (the signature should match the one on your PAN card)
    • Bank proof (any one of these)
    Cancelled cheque, passbook, bank account statements for the last 6 months
    • Photograph
    One passport size photograph is required

    FAQ

    Q.1:Can I invest 500 rupees in share market?
    Invest in direct equity
    Rs. 500 may be a small amount. But it is not too small to buy some direct equity. This is, of course, a viable option if you are a risk-aggressive investor.

    Q.2:Can we invest 1000 RS in share market?
    But the simple answer is that you can begin trading with any amount that you can spare because when you even invest Rs. 1000 you are better off than the person not investing in equities at all.

    Q.3:What is the minimum amount to invest in share?
    There is no minimum limit. Your ability to invest is proportionate to your ability to take a risk. It can be a few thousand, or lakhs, or crores.

    Q.4:How much should you invest in stocks first time?
    There is no minimum amount. If you are investing for the first time, you can begin with a few thousand.

    Q.5:How do I pick my first stock?
    KNOW HOW TO BUY THE FIRST STOCK
    1. Do not fall prey to the trend of investing in companies you don't know anything of, with products you don't have any idea about. ...
    2. Research about the companies you know. ...
    3. Always start small when you begin investing.

    Q.6:How can I learn share market?
    Take a look at the many ways by which you can learn share market:
    1. Read books.
    2. Follow a mentor.
    3. Take online courses.
    4. Get expert advice.
    5. Analyse the market.
    6. Open a demat and trading account.

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