A beginner’s guide to investing in the stock market

Investing in share markets still remains one of the most lucrative forms of investment in India. The recent COVID-19 pandemic and the subsequent lockdown have attracted more and more retail investors to the stock market, according to a December 2021 Bloomberg report, but a large majority of Indians are still keeping their distance from the stock markets either due to misconceptions or due to lack of guidance. While the first point could demand creating an awareness similar to mutual fund advertisement campaigns, let’s try and address the latter through this article. Here is a beginner’s guide to investing in the stock market today.

Understand stocks and stock markets

The primary step is to understand how stocks and stock markets work.

To begin with, stocks are a part of the ownership of a company and this is tradable. When a company is private, the ownership is divided between the founders and investors and each part of ownership will carry a value. During an IPO, all part of this ownership is further split and sold to the public. Each stock might only carry a smaller percentage of ownership and rights and the value of this comes from the fact that this is tradable.

Stocks are traded in the stock market. The price of the stocks is determined by algorithms based on demand and supply. For instance, suppose you bought a stock for Rs.10. The demand for the stock increases as more investors are trying to buy it and when it reached Rs.15, you sold the stock and pocketed Rs.5 as profit. Although there are numerous strategies that you can employ here, this is the very basic of earning a profit from the stock market.

Finding stocks to invest in

Next, your quest is to find stocks to buy today, and it is the most important step. The profit or loss you make is completely dependent on this.

Research is your best friend here. The Internet has granted us access to information and the key here is to put this information to best use. As a newbie investor,analysing this information to come to a decision on stocks to invest in might be difficult. Here, you can get in touch with a financial expert. An advisor can help you understand your investment horizon and this, in turn, will help you identify stock investments that are in match with your horizon. As you gain more experience, you will be able to do this on your own, but the wise thing is do is to take it slow.

Getting investment ready

Once you have figured out where to invest, it is time to get you investmentready. The primary requirement here is a trading account and a demat account. Both are provided by stockbrokers and you can get one easily online with your identity, income, and address proofs.

Here, a trading account gives you an interface to trade while demat account is where all your securities are kept. Once these two are ready, you can go to your trading account login and select and buy the stocks you want.

While stock market investments remain highly beneficial, it is important to make sure you do proper research to avoid the pitfalls. Getting a financial advisor is recommended here, especially if you are new to investing in stock markets. Get an expert advisor and start your investment journey today!

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