How to Invest in Share Market?
For a beginner investor, first question that comes to mind is how to invest in share markets, what are its requirement and how much money does it initially required to invest in market.
When I start my investment and trading carrier in earlier days, I was also having the same questions.
Actually, a person cannot directly go to stock market to buy or sell shares. This part needs to be performed by brokers. They are companies/individuals registered with SEBI. They charge you a fee called brokerage for buying and selling stocks.
Documents required to open a Demat Account offline/online:
- Copy of PAN Card.
- Cancelled Cheque
- Income tax return Acknowledgement (For Commodity Trading otherwise not required)
- Aadhar Card with Phone number linked to it.
- Passport Size Photo and Signature.
That’s it, now you have a Demat Account and you are ready to start trading and investment in stocks.
Now, you can choose and purchase stocks from NSE/BSE of a listed company and can earn with increase in share prices of a company. Let’s say, you want to buy shares of IRCTC and the current market price of IRCTC is Rs. 1350/- per share, now after sometime the price increases to Rs. 1400/- and if you sell the share, you will earn profit of Rs. 50/- which is subject to capital gain tax.
Common Mistakes investors should avoid before investing into Stock Market
Research & Analysis
Research means studying the Balance sheets and profit & Loss accounts of a company. Check their Earnings per share, Dividend payouts in last 5 years and Profit Tend for last at least 5 years. Also check out Management discussion and analysis of stock you are going to invest into.
Don’t keep all your eggs in one basket, invest in different industries and sectors so that your earnings are not dependent on one stock, sector or industry.
Lumpsum Investment in one Shot
Do not just shoot your money in a Stock market in a single go. Go for monthly and regular investment just like Systematic investment plans (SIP) which can help you in averaging your costs. It will bring you financial discipline in investment.
Non-Reviewing Portfolio Health
Reviewing your portfolio health, don’t just leave your portfolio on its own, check it up regularly according to your risk appetite, re-balance it according to need of the hour and your goals and liabilities after all its your hard-earned money.
Investment after watching Television
Do not just buy after getting investment advice from television but believe me no one can predict a market, what will happen in future its uncertain even Warren Buffett got wrong recently predicting the market. So do your own study about companies’ financial performance and results, his debts and other ratios before investment.
Read this comparison of brokers before start investment.