Do you wonder how to invest in share market but fail to find an answer? Moreover, it is a fact that this question is highly popular among outsiders or potential traders. Many people confuse the steps involved and miss or skip a few of them. This dismissal is, undoubtedly, the reason for unprecedented losses.
The fact is, this question is actually where the real journey of the stock market should ideally commence. But, many people tend to ignore it since it seems like a barrier to earning profits. What they don’t understand is the significance of this very question.
Getting any idea of what we are trying to say here?
Yes, but not so much?
Furthermore, do you know there are many do’s and don’ts for trading in this industry?
You must read this blog until the end to learn about these less discussed aspects of the stock market and find the answer to this essential query – How to Invest in Share Market?
How to Invest in Share Market as a Beginner?
Beginner investors always look for opportunity that helps them to multiply their investment. It is not impossible but yes can be challenging and time taking. So, the first mantra to invest in the share market is patience.
Now, before getting into the detail, let’s have a look at the basic structure of the stock market. As already known to many, the share market has a regulatory body that works as a watchdog to ensure smooth working and to avoid any frauds and scams.
Next comes the stock exchange (NSE and BSE) where all the companies get listed to avail their shares to public investors. Now, when the company is getting listed in the stock market, it opens a gateway for potential investors to invest through IPO.
In short, the first golden opportunity to invest in the share market as a beginner is to look for a profitable IPO. Here, to clarify the concepts, all the IPOs are part of the primary stock market.
You can apply for IPO both online and offline. We will be discussing the process in detail in the section ahead.
Now, once the company becomes public, i.e. listed in the market the investor can earn profit and high returns by buying and selling respective shares. Apart from this, you can also invest in US stocks and other stocks listed in the global market. In this article, we will be majorly focusing on the ways to invest in the share market in India.
How to Invest in the Share Market in India?
Investing these days is no more hassle, you can simply invest in the share using any of the trading apps. What’s more important is to know where to invest. How to choose stocks? What are the steps involved in finding the right company for investment?
By the end of this article, you will get answers to all the questions and can invest in the market to earn benefits.
In order to invest in the Indian share market, the first and foremost thing is to open a demat account for which you need to fulfill the following eligibility criteria:
- You can invest at any age in the share market. If you are 18 years, you can invest by opening a minor demat account.
- An Indian citizen or NRI can enter the stock market for investment.
- You can start investing with as low as ₹100 in the share market.
- As an Indian citizen, you must have a PAN card, Aadhar Card (linked with your mobile number), and a saving account in a bank.
Once you fulfill the eligibility criteria, follow the steps below to start investing in the share market in India:
1. Choose a stockbroker
Stockbrokers are the mediators who provide you with the platform to trade and invest in the companies listed in the stock exchange. Now on the basis of services they are categorized into two types: full services brokers and discount brokers.
As a beginner, one can choose a full-service broker who offers you a trading platform, research and advisory services, offline support, and lots more. The discount broker only provides a trading app and that is why they charge flat commission charges which are comparatively much lesser than the brokerage charged by a full service broker.
2. Open a Demat Account
Once you choose a broker, you can visit their website to open a demat account. These days, every broker provides an online way to complete the process, however, if there is any offline branch of the broker near then you can fill out the application form offline too.
For offline applications, you can also download the form from the website and send it to the broker’s address via post or courier.
In either of the processes, you just have to fill in your basic details and upload a few documents for KYC verification and link your bank account with the trading account. On validation and verification, the broker activates your account and notifies you by sending a mail or message to your registered email or mobile number respectively.
3. Download the Trading App
In this digital world, you can invest in any stock using your mobile phone or laptop. For this stockbrokers provide you a trading app that you can download from the Play Store or App store. Also, you can directly login to the web terminal to gain a better trading and investment experience with the broker.
On downloading the app, log in using the User ID and Password sent by the broker.
4. Choose the Company to Invest
Now the application provides you with a broader view of the market by offering you the details of SENSEX and NIFTY50 (stock market indices). Also, it gives you information on top gainers and top losers (stocks that performed best and worst on a particular day).
Other than this there are few recommendations on the basis of expert research which are generally provided in the full service brokers’ app. You can use those tips to make your first investment or can do your own research and analysis using different features of the app.
Here for long-term investment, it is important to do a complete fundamental of stocks for which you can check the profit, revenue, and different ratios. On the other hand for short-term trades, one can focus on technical analysis of stocks.
Here the trader needs to gain a proper understanding of the stock charts, indicators, and strategies that help them to earn profit in different market conditions.
5. Buy Stocks to Make Your First Investment
Now, after defining the holding period and trading strategies, click on the stock and then on the Buy button. Enter all the details in the order window (price, quantity, product type).
For short-term investment, you can safeguard your position by choosing advanced order types (Stop Loss and Trailing Stop Loss Order).
Confirm your order and tap on Buy. The shares get credited to your demat account after T+1 days, i.e. after 1 day of the trading session. Following similar steps, you can exit from your position by choosing the sell option from your position or portfolio list.
How To Learn Share Market Investment?
There are several steps you must achieve before you start trading various financial instruments in the market. The answer to this very pertinent question i.e. how to invest in share market lies in understanding the procedure.
The first step towards investing in the Indian share market is Stock Market Education. This step can be cleared by either learning the share market online or choosing the offline path.
The popular ways of learning how to invest in share market online are as follows:
- Mobile Applications
In the digital era, education has been simplified. With mobile applications, you can learn and study anytime, anywhere. There are several applications available that’ll guide you with the journey.
From many foreign players to domestic traders and stockbrokers, you can choose from an ocean of mobile apps available in the market. If you ask our favourite of all, the answer is below.
Stock Pathshala is one such mobile application. You can download it from Google Play Store and Apple Store and start learning the stock market as the app covers various courses on multiple aspects.
The app is an appropriate portal to look for the answer to how to invest in share market.
Youtube content is accessible to the masses for free and is one of the best ways to find how to invest in share market. Many YouTubers have fantastic content and are worth your time and energy.
On the other hand, others might be misleading in zillion aspects. So, before you choose a Youtube channel, make sure you know about the background of the mentor and the level of authenticity of his content.
- Online Video Courses
With the current situation of COVID 19, there has been a shot up in the number of online courses offered by the stock market experts and traders.
These courses help you achieve your goal by conducting classes online. They can extend the information in either a pre-recorded video or a live session.
Many experts tend to share their experiences and ideas of the stock market in the form of blogs. They pen these blogs to guide the beginners to become experts in their desired fields.
The blogs cover specific topics as per the expertise and an excellent source of information for blog lovers. You can look for your favorite one that is easy to understand and explains the concepts in the simplest forms.
One of the best stock market blog is A Digital Blogger. There are a few others too.
This way of learning is gaining popularity in India in recent times. Since it is at the stage of increasing popularity, the content available on this platform is limited.
Nevertheless, it is a great source to learn how to invest in share market while completing the chores, driving to work, or completing other daily tasks.
So, you shall surely look for different stock market podcasts too.
It would be unfair not to mention the other side of the aisle, i.e., offline learning ways. Although there are multiple ways to learn in the offline world, the best offline ways to look for an answer to how to invest in share market are:
There is a vast and bottomless ocean of books available in the market. They discuss various trading concepts in the stock market and simultaneously attempt to answer the question of how to invest in share market.
You can look for books that suit your desired field in the trading industry. If you are looking for short-term trading, then you must learn technical analysis, for that look into books for technical analysis while there are generic books for learning stock market as well.
- Offline Courses
In recent times, learners and beginners have started not to prefer offline classes or courses. Partly, the reason is COVID 19 and somewhat is the inability to spare traveling time.
But still, many people learn the intricacies of the stock market through the experts and traders that wish to stay low-key and teach in the old formats.
Although the method might seem out of time, the answer to how to invest in share market remains the same.
- Practical Implementation
This learning method is least preferred as it requires a lot of surplus money that might or might not yield you profits. But as it is said – practice makes a man perfect; it is an example of that.
Now that we know about the different ways of learning about the share market, we must discuss a bit about the beginners in the stock market.
Since many courses offered by this app are free of cost, you are undoubtedly paying for the premium version once you go through the courses available free of charge.
Investment Tips in Share Market
The traders or investors are required to follow some ground rules to survive in the share market. These rules are not laid down by any authority but are the unsaid rules of experience accumulated over the years.
Some of these rules have been listed below:
- Even before you jump into the race of earning profits from the stock market, make sure you understand the difference between a trader and an investor. Moreover, you are sure of what you wish to be.
- Prior to commencing your investment and trades journey, make sure you understand the basics of the market.
- For this, you can refer to the stock market courses or books.
- Understand the difference between investors and traders. If you are an investor then understand the basic of the company before investing for which you can refer to the fundamental analysis books.
- One of the biggest blunders made by traders or investors is not spending enough time selecting the correct stockbroker. A wrong choice leads to many problems in brokerage charges, trading platforms, etc.
- Without any excuse, always use stop loss to reduce your losses. This feature might help you in sudden market crashes and minimize the loss according to your risk appetite.
- In the excitement of making huge profits from the market, many traders turn to the margin facility. This feeling can land you into many problematic scenarios. So, avoid availing the facility of leverage or margin facility.
- You should undoubtedly understand the various types of orders as it will help you enter or exit the trade at the most favorable moment.
- Although the derivatives market seems very tempting, you should maintain a distance from this financial instrument as a beginner. Once you have a proper understanding of all aspects related to derivatives trading like futures, options, call option, put option, etc then you can look forward to trading in it. For learning, derivatives pick up any valuable dervatives courses in India.
- The initial days of your experience in the stock market might be good or bad. So, always start small as the knowledge you gain from them can be utilized later.
- Never trade stocks because they in the news, good or bad. Use the specified analytical tools and then decide on your investments and trades.
- Always diversify your investments if you are into long term investment goals. This technique can help you reduce and diversify your profit margin.
- As a beginner, you should avoid IPOs as they might be very risky without adequately analyzing the company and the market.
- Try to stay rational in your decisions related to the stock market, as an emotional attachment with a financial instrument can hurt you.
- You should invest money that is surplus and not a requirement.
- Keep attempting to understand a company’s financial reports as they are an essential aspect of analysis before placing your trades.
Minimum Investment in Share Market in India
The Indian Share Market does not set a limit on the minimum investment amount. If you wish to trade in the share market, then the only minimum investment you must make is to open a demat account and a trading account.
When you decide to trade in the stock market, you have to pay the account opening charges for a two in one or three in one account as per the stockbroker you have selected.
After you open an account, the broker also levies an annual charge named – Annual Maintenance Charge, popularly known as AMC. This charge varies from broker to broker.
It is relatively high for a bank based stockbroker and the least in the case of discount brokers. In addition to these two, another significant charge you pay is the brokerage fees.
The discount brokers charge the least brokerage charges, whereas a full-service broker tends to charge relatively higher brokerage. However, there are a few exceptions in every case.
Investing in Share Market is Good or Bad?
Before we answer this question, we hope that your query about how to invest in share market has been clarified and you have a clear understanding of the complete process.
An answer to the question investing in share market is good or bad is very subjective. The answer is heavily dependent on the experience of the person who is answering.
A trader or investor who earned huge profits and had a pleasant experience would have an affirmative answer. On the other hand, a trader or investor who incurred losses and faced problems on the broker’s end would respond negatively.
So, to have a pleasant encounter, you must adhere to the above-discussed points and make sure you don’t experiment beyond your risk capabilities.
Lastly, we hope this article helped sort your queries regarding the stock market.
Happy learning, dear folks!
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