In today’s fast-paced world, everyone is looking to gain more money in different ways. Among various popular ways, investing in the stock markets is considered a great way to earn money. In recent times, the spectacular performance of stock markets has inspired many to move towards stocks to make big gains.
If you think that investing in stock markets is a smoother play, it is certainly not. Though authorities have taken several measures to infuse a high level of ease in stock market investment, there are lots of things that are highly technical and it is difficult for a normal person to understand the same. But this doesn’t mean there is no right way to do this. In this post, we will delve deeper and let you know process to invest in the stock market.
According to one of the top 10 stock brokers in India, one of the quickest and easiest ways to invest in stock markets is to open a brokerage account online and buy stocks. If you don’t feel easy with that, you can choose to get a professional who can manage your portfolio, by charging his commission. Both ways, you can invest in stocks online and start with even a small amount.
Things required before investing in stocks
When it comes to investing in the Indian stock market, there are a few necessities that need to be known. Here are the few things that you will need to ensure smoother investment in the stock market:
- Bank Savings account
- Trading and Demat account
- Internet connection
To open a trading and demat accounts, you would need certain documents like:
- PAN Card
- Aadhaar card (for address proof)
- Canceled cheque/Bank Statement/Passbook
- Passport size photos
Steps to invest in Indian stocks – Process to invest in the stock market
- Specify your investment objectives
It’s highly imperative, to begin with determining your investment objectives. Take every decision with end goals in mind.
Do you want to grow your savings to counter rising inflation and receive better returns? Do you want to generate a secondary income from your investments in the form of timely dividends? Do you have a specific investment goal? Or do you just want to enjoy the magic of the stock market while accruing more wealth?
No matter whatever investment objective you have in mind, make sure that you do not invest too much or get too much attached to the stock market? In addition, a majority of investors go this same way and define their goals later.
If you carry a goal behind investing, do keep in mind that the time frame for diverse investment goals will vary. The goal could be anything like buying a new home, new car, support your child’s higher education, daughter’s wedding, retirement, etc.
However, if you are investing for retirement, do not forget to take a long-term time horizon. When you know your investment objectives, you can decide how much money you actually want and for how long you would have to keep investing.
- Come up with an investment strategy
Now once you determine your investment goals, the next thing to work on is thestrategy. You might need to determine whether you want to invest in one go or in small amounts through SIP. If you are looking to make small intermittent investments, don’t forget to check how much you want to invest monthly.
There’s a general misunderstanding among people that you need a big amount to start with. There is no such thing in actuality. Through SIP, you can even start as low as Rs. 500 per month.
- Go through some investment books
As the knowledge you have about stock investment is very important, you should make every possible effort to increase it. One option is to read various books based on stock investment. There are lots of books available both offline and online. Some of the best ones are:
- The Intelligent Investor by Benjamin Graham
- Common stocks and uncommon profits by Philip Fisher
- One up on wall street by Peter Lynch
- The little book that beats the Market by Joel Greenblatt
- The Dhandho Investor by MohnishPabrai
- Choose a stockbroker
This is an important step as you can invest in stocks only through a stock broker. A stock broker acts as an intermediary between you and the stock market, Always remember best stock broker provides you the best demat account in India also. There are primarily two types of stock brokers in the industry – full-service stock broker and discount brokers.
— Full-Service Brokers (Conventional Brokers)
They are known as traditional brokers who offer trading, market research, and advisory servicesfor stocks, commodities, and currencies. These brokers levy commission on every trade executed by their clients. They also support investing in Forex, Mutual Funds, IPOs, FDs, Bonds, and Insurance.
Some examples of full-time brokers areSharekan, Kotak Securities, ICICIDirect HDFC Securities, Motilal Oswal, etc
— Discount Brokers
Discount brokers are low-cost brokers and offer only the trading service to their clients. They do not offer stock advisory services. They offer reasonable brokerage, better performance, and a good trading platform for stocks, commodities, and currency derivatives.
Some of the leading discount brokers are Zerodha, Upstox, 5Paisa, Groww, Paytm Money, and others.
For beginners, Zerodha would be a better choice as it charges a brokerage of 0.01% or flat Rs. 20 per trade across equity, currency, and commodities. Moreover, you can start trading with a discount broker as the amount is low. Subsequently, when you move up, you can go with a full-service stock broker for full-fledged support. Don’t forget to check the details of the top 10 stock brokers in India.
- Do proper research
Begin gaining deeper information about the companies around you. If you like the product or services of any specific firm, try to dig out more about its parent firm. Check if it is listed on the stock exchange, its share price, etc.
The more information you have about a specific company the better decision you can take about the purchase or selling of its shares. This is one inherent requirement that must be fulfilled by every promising trader and investor.
Always remember that investing in the stock markets is both an art and science. Before you start to invest in stock markets, make sure to prepare yourself for the same by gaining as much information you can. Always choose to work with the best stock broker in India to get the best stock tips and recommendations. If handled carefully, you can make it big with sheet determination, knowledge and efforts.