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How to Invest in Share Market – How to Start Investing?

Investing is the simplest way to set aside money while you are busy with life and have that money work for you.

The process of laying out money now in the expectation of receiving more money in the future.

Warren Buffett

The goal of investing is to put your money to work in one or more types of investment vehicles in the hopes of growing your money over time.

Why to invest?

In India looking at the current scenario, the inflation rate is about 6%. So if today you have Rs.100 next year it would be Rs. 94, this is how you are losing money to inflation. To avoid this, it’s better to allocate your funds to generate good returns and beat the inflation.

Why invest in share market?

Albert Einstein once said, β€œCompound interest is the eighth wonder of the world. He who understands it earns it, he who doesn’t, pays it”

Compounding is the process in which an asset’s earning from either capital gains or interest are reinvested to generate additional earnings over time. The power of compounding works very well in stock markets. 

Learn more about compounding here.

How to invest in share market in India?

Step 1: Open Demat account online and ensure that it is linked with a pre-existing bank account.

Step 2: Sign in to the Demat account via the mobile-based online trading app or web platform.

Step 3: Pick a right stock that you want to invest in. Here is how you can identify undervalued stocks in India.

Step 4: Make sure that you have sufficient funds in your bank account to buy the stocks/Shares.

Step 5: Purchase the stock at its listed price and specify the number of units.

Step 6: Once a seller reciprocates that request, your purchase order will get executed. Post completion of the transaction, your bank account will get debited with the required amount. Simultaneously, you will receive the shares in your Demat account.

πŸ“‹ Documents required for opening a Demat and Trading Account

  • PAN Card
  • UID (Aadhaar)
  • Driving Licence
  • Passport
  • Voter Identity Card
  • NREGA Job Card
  • Any document notified by the central government

πŸ”Ž How to find and pick stocks?

The answer to this question cannot be universal. It entirely depends on your goals and your risk appetite. Identifying the right stocks that meet your investment strategy and goals is daunting, but if you can analyse and research the company on your own, you can become a profitable investor. You need to know about both fundamental analysis and technical analysis to find the right stocks for long-term investment. Also, it is equally crucial to understand the difference between value investing and intraday trading.

3 factors you should consider while investing in stock market

1. Investment objectives

If you want to invest in the stock market or any other area of investment, you need to determine your financial goals first. You must pick stocks after taking your financial goals into account. Decide your investment horizon as well before investing.

2. Risk-bearing ability

 Another essential factor to take into account when investing in stocks is your risk appetite. Investors who have a low-risk appetite may consider investing in defensive stocks that provide stable returns and are less impacted by market volatility.

3. Diversification

Diversification mitigates risks. In other words, the more your investment is spread across different sectors, the lower will be the financial risk associated with your investments. When it comes to investing in stocks, there are two markets that you can consider.

With all this information you are ready to make your first investment.

Happy Investing πŸ’°

Disclaimer: This blog is not to be construed as investment advice. Trading and investing in the securities market carries risk. Please do your own due diligence or consult a trained financial professional before investing.

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Ashish Thakur

I am all about good food, music and investments.

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