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Investment in the stock market can turn out to be a little challenging for beginners who are new to this industry. In this guide, we are going to walk you through the 8 simple steps for making the first investment in the share market. Letu2019s get started.
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A Comprehensive Guide for Investing in the Stock Market in 2021
Investment in the stock market can turn out to be a little challenging for beginners who are new to this industry. In this guide, we are going to walk you through the 8 simple steps for making the first investment in the share market. Let’s get started. Step 1: Get the Right Investment Tools You can buy shares of a company through an investment account. This account must be linked to the Demat account as well as your bank. You are supposed to log into the trading account to purchase and sell stocks. To open a trading account, you need to choose the company and submit the personal details for account verification. This includes your contact number, email address, address and identity proof, name, and other details. For ID verification, you can upload any government-issued IDs. Once your account is verified, you will be able to use it to make investments.
Your shares are held in the Demat account. You could either open a new Demat account with the trading account or use the existing Demat account. Either way, it is important to link the Demat account to the trading account to get started with share investments. Additionally, you have to link your bank account to the trading account to process the online transactions. Step 2: Use Your Stock Trading Account You can start buying shares of any company through your trading account. Search for the company you’d like to purchase the shares from. You can also choose the companies listed on the stock exchanges. Then, choose from Intraday, Cash, and Margin trading. If you are new to this market, consider cash trading. Once you are done selecting the shares of a company, the next step is to decide the number of shares you would like to purchase. Let’s say your budget is INR 3000 and the price of the share is INR 300. You can buy 10 shares of this company. You can enter the price of the stock and make a purchase. Step 3: Don’t let the Fear of Risk Affect your Investment The share market is volatile. The prices of the shares fluctuate on a regular basis. There are ways to mitigate risks, but risks are inevitable. You can’t avoid it. You don’t have to worry about the security issues when buying the shares online. However, it’s important to pay special attention to the company you are investing in. Many beginners have a low-risk appetite, which is absolutely normal. So, consider your risk-bearing ability before making an investment, but don’t let it affect your investment decisions. Step 4: Reasons you must invest in Share Market There are many reasons why the share market makes an ideal option for aspiring investors. First of all, the price of the stocks tends to appreciate over time, especially if you opt for long-term investment. Secondly, the stock market offers you a wide array of investment opportunities. You don’t have to limit yourself to the stock investment. Try different investment instruments, such as mutual funds, futures, commodities, and ETF.
It allows you to diversify your portfolio. You could invest in different instruments to diversify your portfolio. It helps mitigate your risks. Even if a particular company underperforms in the market, you have other options to improve. Step 5: Risk Premium Risk premium could be defined as the reward a person earns for bearing the risks associated with the share market. One easy way to make the best of your investment is by identifying the best company for stock investment. It goes without saying that the more risk you are ready to endure, the higher the returns you earn. Step 6: Identifying the Best Stock for Investment Before you enter the stock market, it is important to research the stock exchanges and find the best company. The last thing you want is to end up losing all your money in the share market. So, invest in the stocks of a reputable company. The question is how you can find the best company for investment. Well, you could gather ideas about the companies listed on the stock exchanges through news and social media. You can also conduct your own research and use technical analysis tools to ascertain the past performances of the company. Note that the previous performance has nothing to do with the stock value of a company; neither can it be used to determine the uptrend and downtrend. You can also take the help of a professional financial advisor. If you are still not certain about the investment, consider only the fundamentally strong shares. Step 7: Remember the Share Investment Tips While the growing technology has opened up several opportunities for investors, it also makes it a bit challenging for you to identify the right investment instruments. Some of the important tips you must keep in mind when buying stocks are: Identify your investment goals. Remember the reason you entered the stock market. Do you plan on staying invested in the long-term or do you want short-term investment options? Determine your goals and make an investment accordingly.
Research suggests that an investment in the stock market can earn you up to 12% returns annually. But, that’s just an average. You can earn more than that if the company grows and makes profits. You must think rationally. You can’t become a millionaire from stock investment overnight. Always buy the stock when its price falls. However, that doesn’t mean you can buy shares from a random company. You must create a list of the companies you would like to invest in. Make a purchase when the value of the stock falls by 8 to 10 percent. Step 8: Minimum Investment Amount Surprisingly, there is no minimum limit as to the number of shares you could buy and the amount you have to spend. You can purchase shares for as low as INR 50. However, each transaction will incur a certain percentage of brokerage fees.
