How to Invest in the Share Market? Tips for Beginners
An increasing number of individuals are now opting to invest in the stock market with the aim of wealth creation. However, finding success in the stock market is not easy, especially if you’re a beginner. You would have to approach your stock market investments with a solid plan in place and trade cautiously.
If you’re unsure of how to invest in the share market, this comprehensive guide may be able to help. But before we proceed, let’s first get a proper understanding of what the stock market actually is.
What is the Stock Market?
The stock market is a platform where investors can freely buy and sell shares and other securities of listed companies through exchanges. Currently, there are two exchanges that are operational in India — the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE). The Indian stock market is heavily regulated and constantly monitored by the Securities and Exchange Board of India (SEBI), which is an independent governing authority.
Difference Between Short-Term and Long-Term Investment: How should beginners choose?
Being aware of the difference between short-term and long-term investments is key to knowing how to invest in the share market.
An investment is described as short-term when you hold it for less than 12 months. Investors looking to make quick profits off trades generally don’t hold securities for more than a few months. In some cases, investors do not even hold their investments for more than a few days, and generally try to sell their holdings as soon as the stock price increases.
When you hold an investment for 12 months or longer, it is called a long-term investment. Investors who wish to multiply their investment value exponentially usually tend to hold their stocks for years on end. This kind of long-term investing is also known as value investing.
As a beginner, you need to first decide the kind of investment strategy that you wish to adopt. For instance, if your risk tolerance is high and if you’re more interested in making profits quickly, then investing for the short term may be more suitable. Alternatively, if you’re wary of taking too much risk and wish to adopt a more systematic approach, then long-term investing may be more ideal for you.
A Step-By-Step Guide on How to Invest in the Stock Market for Beginners
Follow this quick guide on ‘how to invest in the share market’ to get started with your wealth creation journey.
Open a demat account:The first step is to open a trading and demat account. Without this, you cannot invest in the Indian stock market. That said, when opening a trading and demat account, make sure to reach out to reputed stockbrokers like m.Stock.
Choose a type of investment:Once you’ve opened a trading and demat account, the next step is to pick the right kind of investment. In India, there are multiple asset classes that you can invest in. This includes stocks, mutual funds, bonds, and derivatives, among others.
Research:Before you invest in the asset class of your choice, ensure that you carry out thorough research. This will help you reduce the possibilities of choosing poor stocks for your portfolio, and thus minimize the risk of losses.
Make investments in stocks that best suit your targets:Investing in the right stocks is key to ensuring that you reach your financial goals. When picking stocks, consider factors such as your investment horizon, risk tolerance, investment amount, and your financial objectives.
Monitor your portfolio regularly:Investing isn’t a one-time activity, but rather a continuous process. You need to periodically monitor your investments. Examining your portfolio will allow you to spot underperforming assets early on and enable you to take appropriate corrective measures.
Keep up with the trends and fluctuations:The stock market moves in cycles, and there are many trends that you need to watch out for. Depending on the overall economic conditions, the market can sometimes even be volatile. Therefore, you need to always keep yourself updated about the current market trends and developments. This will help you make better investment decisions over time.
How to Invest in Stocks for Beginners?
Since a trading and demat account is a mandatory prerequisite for investing in the stock market, you should start your journey by first opening an account with a seasoned stockbroker such as m.Stock.
Once you have your account with m.Stock up, you will no longer have to worry about how to buy stocks for beginners. The user-friendly and intuitive platform of m.Stock provides you with all the relevant information you need to make an informed investment decision. It has been designed to make it easy for you to start investing right away. You even have access to a voice assistant that can help you with every step.