Are you looking for a good return on your investment? If yes, then there is nothing better than the stock market where you can get a return of as high as 355 and sometimes even 100%. It is true and here I am with the guide on how to invest in share market as a beginner in India with the step by step instructions.
Even, I had this basic question of how to invest in the share market as a beginner because I didn’t know anything back then. It was 2016 when I started trading online in share market because that was the time when I completed the age of majority in India. It was very confusing for me as a beginner but being a commerce student I already knew a few things which may not be familiar to you.
But, don’t worry, I will help you with the process on how to invest in the share market in India and the relevant terms and tactics that you must know. So, to begin with, I might sound a bit boring but trust me these things are very important.
And, to invest anything you have to save and to save you need some earnings first. So, if you are looking to make money online then here are 50 ways to make money online that work in 2019.
So, to say anything about how to invest ins hare market you must know what share market is and how things go in there.
Share market is a place where you can buy and sell shares. So, the obvious question that should come to your mind is what is a share now?
A share is a part of the worship of a joint-stock company. A company that is registered in the Companies Act in India and is a public company that is listed on a stock exchange regulated by SEBI. SEBI is the regulating authority which stands for Securities Exchange Board Of India. One thing that can be said is that every person who holds a share is the owner of that company for that amount.
The person who holds a share is called a shareholder and he/she is responsible for his ownership[. But the good thing is that this ownership is bout and sold in the stock exchange or share market.
So, if you buy a share you are buying a company for an amount equal to your share. And, the main idea behind trading in shares is buying at a low price and selling at higher prices to make a profit.
But, most people don’t invest in the share market because of the lack of knowledge. And, a lot of people believe that the share market is a game of bet which it is but only if you don’t have knowledge. And, it is a place that requires a lot of knowledge from your part.
So, instead of investing in the share market you can go for a few of the options below:
- Fixed Deposit
- LIC Policy
- Mutual Funds
- Real Estate etc.
You can get a return of about 20% to 30% in share market but not in any of the other options. A fixed deposit gives you about 6-7 % only. And, the maximum that you can get is 15-20 % via mutual funds only. Real Estate is quite down and gold is considered as jewelry in India.
So, I would always advise to invest in share market and get some knowledge first. Because if you don’t know how to invest in share market properly you will end up losing your money and just like others you will blame the market not yourself.
Who can invest?
Anyone who is a member of a stock exchange can trade with it. But, the problem is that it requires huge money to be a member. So, all you can do is trade through a broker. There are a lot of popular Stock Broker Companies link Angel Broking, Sharekhan, etc.
So anyone who is 18 years and above and has a bank account with the feature of net banking that it. Then you will have to open a Demat account to store your shares. Because it’s 2019 now and every share is traded in electronic form. So, that’s a must now.
How to Open a Demat Account?
Now, you know that you are eligible to invest in the share market. So, you need a Demat account to start trading.
Firstly, you can go to your own bank and ask them about the Demat account. Every bank has this facility and they will be glad to have you. But the problem is that they will charge a high commission.
So, if you don’t want to go with a bank then there are a lot of stockbroking companies.
Same thing I did in 2016. I applied in Angel Broking and Sharekhan both and Angel Broking contacted me first. So, I chose them. And, then a guy from their company came to my home and collected relevant documents.
Here are the documents that you need to open a Demat account.
Documents Required to Open Demat Account
How to Start Trading Online?
So, now you have a Demat account and now you can start trading online, but why online?
Because almost every broker has a mobile app now and all you do is buy and sell shares through the app. You can do it on the app or the website.
Initially, they will teach you everything about their app and how you can use it.
The market starts at 09:15 and closes at 03:20. And, during this time you can do the trading on your own. It’s simple, all you have to do is buy a share at a price and sell it at a higher price.
Ask your broker for the assistance and they will help you with everything.
How to keep track of the market?
The biggest problem is that as an investor you rely on tips not on news. If you are going to put in your hard-earned money, you have to be aware of everything.
You should not invest your money just because someone advised you. Your broker will al; ways give you advise. But the problem is that every time you do trading, your broker is going to earn a commission. So, it doesn’t matter if you are in loss or profit.
Then, how will you have the track of the market? Because you know how to invest in the market but you still don’t know which share to invest.
Firstly, my advice to you will learn the balance sheet reading so that you can understand what is going on with the company. And, then you will be familiar with those terms.
Then you can start reading the newspaper with the financial news. But, reading newspaper is boring now.
My advice to you would be to use this app called Moneycontrol where you can aaa whole analysis and news about share market.
What is NIFTY & SENSEX?
So, we have NSE & BSE as two stock exchanges in India. And, both Nifty and Sensex are two indexes for these two stock exchanges.
NIFTY is an index of fifty companies listed in NSE and being actively traded in the market. These are the top 50 stocks from different sectors and industries. This index is calculated taking a base year as 1995 and with the base of 1000. So, if you are looking to invest then NIFTY is a list of stocks that you can invest in.
All I can say is if you don’t want to do your research then you can pick any stock from Nifty or Sensex. And, these stocks are the blue-chip stocks.
Some Relevant terms that you should know
Before you start to invest in share market you should know a few terms and their meanings so that you do not face any problem. Here are a few terms that will help you in the share market.
Share is the product that is being traded in the share market and its a part of the share capital of a company. I have already mentioned it in the detail above.
The dividend is the return on every share. Its a part of the profit that is paid to shareholders. So, if you hold a share then the company will pay you a certain percentage on the face value of your share.
IPO (Initial Public Offer)
Initial Public Offer better known as IPO is the initial offer that a company asks for its shares. When a company becomes a public company from private then it issues certain shares. And, before issuing these shares it asks the general public for an offer to buy shares. This is Initial Public Offer.
Face value is the value written on the face of a share. It is the value on which dividend is paid. It can be Rs 1, 10, 100, 1000 or any amount like this.
This is the value on which shares are being traded in the market. It is the value on which shares are bought and sold. It could be higher or lower than the face value depending upon the reputation and popularity of the company.
Margin is the amount that allows you to buy a share paying a lesser amount than it’s the price in the market. This means that you are borrowing money from your broker to buy shares. Let me explain with an example, Suppose you have Rs 1000 in your account and you asked your broker to buy shares worth Rs 10,000 for you. And, if your broker does accordingly then the difference of Rs 9,000 is the margin.
Volume is the number of shares traded during a day. It can also be the number of shares you purchased.
Yield is the percentage of revenue you make with the dividend of the shares. We calculate Yield by dividing the dividend received by the purchase price of shares.
Your portfolio is the list of stocks that you own.
It is the price that a trader is willing to pay for a share.
If the market is aggressive and prices are increasing it is bull markets.
On the other hand, if the market is on the downside, it is a bearish market.
Other than these here are 37 Stock Trading Terms that every Trader needs to Know
I have a different ideology with regards to the share market. If someone asks me how to invest in share market an s beginner? I simply ask them a question of whether they want to be a trader or create wealth.
And, if you want to be a trader then go ahead get your Demat account and keep an eye on the market. I know a few people who do nothing but only trade in the share market. And, they make Rs 40k to 50k every month with a simple trade.
But, if you want to create wealth over time then follow this simple formula that I follow and the people who told me this they follow.
So, all you need to do is invest a certain amount every month on a certain stock only. You don’t need to do a lot of research and study all the time. Just do market research and find a perfect company that you believe is going to nourish in the long run. Then keep investing your money in that company only. Who knows, maybe after a few years you might be the Director or key shareholder of that company.
One more thing that you can do is if you have a certain amount to invest now then buy a few shares of a certain company that you feel is going to grow and forget it. After 5 or ten years you will see tremendous growth in your money.
Now, since you know “how to invest in Share market”, tell me when are you planning to buy your first share?