Investing in the stock market is considered a popular way to grow your wealth. With the right guidance, you can earn significant profits and create a sizeable financial portfolio for yourself. Investing in the stock market isn’t only about making profits; you also need to have a nose for choosing the right stocks. If you too have been thinking about how to start investing in share market but don’t know whom to ask, we’ve got you covered.
Sure, investing in stock markets comes with a few risks, but the benefits tend to outweigh the risks. Eventually, you’ll be glad to you spent your time and took the effort to understand the world of share markets and how it works.
What is Stock Trading?
Stock trading refers to the buying and selling of company stocks listed on national financial exchanges. When a company goes public, it lists its shares for sale publicly. Individuals who buy or sell these stocks are referred to as stock traders. They’re knowledgeable about the market, know what’s happening and where one should invest their money. With the right knowledge of how to time markets and a willingness for risk, anyone can participate in trading stocks. The first step toward understanding how to start share market investments begins with you.
What type of investor are you?
Before you can get started with your share market investments and trading, you need to answer one fundamental question – What kind of investor are you? Are you the one willing to take risks for higher profits or do you like to minimise risks when it comes to investing your hard-earned money? Will you want to trade actively and manage your money or are you happy to let experts invest your money for you?
Is investing in Share Market a good idea for beginners?
The most definitive answer to this question is Yes. Everyone, including beginners, should give share market investments a try. But before you make this decision, set some financial goals and understand if you can comfortably stay invested for an extended period even if the share market goes through some ups and downs.
As a beginner, you have various tools and resources at your disposal that will help you start in the world of share market. However, how to use them and to what extent, is dependent entirely on you. To help you get started, we’ve listed down the most important things you need to know as a beginner investing in share markets for the very first time.
What do you need to know on how to start share market investments?
When it comes to trading and investing in the Indian Stock Market, it is best to have a plan in place before you can get started. Here are some cautionary points for your trading gets a successful start
- Clear your pending debts: As a precaution, we advise that you clear all your high-interest debts like personal loans, credit card dues etc. first, before you start investing in the stock market.
- Invest only surplus funds: Another essential rule that smart investors follow is that they only invest funds that are surplus to them. Never borrow money to buy stocks and do not even take money that you’ve kept aside for your other financial needs. It’s best to invest only the additional income that you have on hand as there are no guarantees of losses or returns.
- Keep some money aside: As a contingency plan, always set aside some cash for emergencies. If you invest all the money in your stock market trades, you will put yourself in an awkward position if an emergency were to arise.
Now you know the basics of how to start share market investments, here are the steps you need to follow to become an expert trader
- Set goals: Before you begin investing, decide why and what you want the end goal to be. Do you want long-term capital appreciation and earn higher returns? Do you want to receive an additional source of income in the form of dividends? Do you want to try your hand at share market and see what you like best? Defining what the goal of your investment will help you understand how much you should invest and how long you will have to stay invested.
- Have a plan:Once you have defined your investment goals, it’s time to create a strategy to make those investments work. Decide whether you want to make lump-sum investments or small regular monthly investment basis your current financial standing. You don’t need to start straight with significant amounts. You can experiment with a small sum and gradually increase it.
- Educate yourself: One of the most important aspects of becoming an expert trader is the knowledge that goes with it. Do your homework, read up about the stock market, do your research on the companies you want to invest in, check their performance reports and keep an eye out for news stories, policy changes and newsletters. The more research you have on your favourite stocks, the better informed your decisions will be.
- Open your trading account: After reading up on how to start investing in share market, it’s time actually to do it. You can have a broker handle your investments or create a trading account that lets you be in-charge. At Angel Broking, we offer you both. Open your account with us and gain access to in-depth share market research, performance reports and everything else you need to trade and make investments like an expert stockbroker
- Set a budget: The excitement of starting your share market investments can often lead you to spend more than what’s comfortable. Set aside a budget for your stock market investment. Ensure that you stick to that budget when you trade during the day.
- Do your research: One fundamental reason why stock investments work for many is that they evaluate information. Apart from following your favourite stocks, study the financial market trends extensively. You must stay in tune with what’s happening across sectors and commodities. Have a global view, stay current with international news and geopolitical events. Nowadays, many investors also have active discussions on online financial forums; you can be part of these too. However, we recommend you thoroughly research the forum’s objective before you join.
- Find what works for you– Regularly read up about the workings of the share market. Keep a checklist of companies you’re interested in and watch their stocks to determine their performance. As you trade more and more, you will figure what works best for you, keeping your financial goals in mind. The trick is to be aware and try out new techniques that will get you the maximum profit from your investment.
- Be logical, not emotional– When you start investing in share market, you must make decisions with a clear head. It’s a fast-paced environment where things change constantly, and in difficult situations, you must reason and make logical decisions instead of emotional ones. Any expert trader will tell you that the first rule of business is trade with your head, not your heart.
- Evaluate regularly– By now, you’re a pro on how to start investing in share market. But it’s important to remember that share markets are extremely volatile and the situation can change rapidly from one day to another. A best practice is to evaluate your investments regularly. Check quarterly, monthly and half-yearly reports, understand why something worked in your favour or didn’t. Ask questions and take chances. The only way to get more from stock trading is to make mistakes and learn from them.
Types of stockbrokers in India
India has mainly two major types of stockbrokers– Full-service brokers and Discount brokers.
Full-service brokers are the traditional brokers who provide a wide variety of services ranging from buying and selling of shares, investment advice, financial planning, portfolio updates, share market research and analysis, retirement and tax planning, and more. These brokers will offer you personalised investment services with individualised recommendations to suit your needs and financial goals. Established in the year 1987, Angel Broking is one of India’s largest and leading full-service retail brokers.
The second type of brokers in the industry are Discount brokers. These are online brokers who offer no-frill stockbroking accounts. They do not provide personalised services to their client. They are known for providing the necessary trading facility at the least possible cost. By choosing a discount broker, you can take control of your trades at lower brokerage costs.
So, how do you decide on the right broker for you?
Choosing the right broker for you is as important as making your first trade in the share market. Before you decide, review the kind of offerings each type of broker is giving you and compare those to your needs and requirements. Compare the charges and the type of accounts on offer. It is also a good idea to do your research and understand the broker’s reputation for trading in the industry. And over and above, is the broker on par with the rapidly evolving financial market in India and around the world. When you’ve deduced the answers to most of these questions, selecting the right broker will be easy and quick.
Now that you know the basics of getting started with your share market investments begin investing and get closer to reaching your personal financial goals. Profits earned from the share market can be a great source of secondary income. And you can add that to your fund for buying a house, buying a car, higher education, travelling abroad or just any other dream you want to fulfil. So, get started today to yield better returns in the long-term. Just remember to stay up-to-date, regularly evaluate your investments, and know when it’s time to bow out. When you’ve mastered these tips, the art of investing in share markets will come as quickly to you as it does to the most expert traders.
With all the basics out of the way, you can now start your journey to becoming a pro stock market trader. To open your trading account with us, click here. A world of seamless trading transactions, expert advice and industry knowledge await you. Take that first step to begin investing in the share market today. Happy investing!