Share Market Guide For Beginners – A Complete Guide for Beginners to Learn How to Invest in the Share Market in India: Hello Investors. Today we will discuss one of the most basic topics for a newbie – How to invest in the Indian share market?
We plan to write this post for a few days because there are many people who are ready to invest, however, do not know how to invest in the market. Through this article, they will get answers to their questions and learn the step-by-step process of how a beginner can start investing in the Indian share market.
Share Market Guide For Beginners
Please note that this post may be a bit longer as we try to cover all the basics that a beginner should know before entering the world of stock investing. Make sure you read the article till the end, because it will definitely be worth reading. Let’s get started.
A Beginner’s Guide On How To Invest In The Share Market!
To invest in the Indian stock market, there are a few prerequisites that we would like to mention first. Here are some things you need to invest in the stock market:
To open a demat and trading account (usually fully open and called a 2-in-1 account), the following documents are required:
Where to open your trading and demat account? – The ‘choose your stock broker’ section (STEP 4) will be discussed later in this post.
Prepare your documents. If you don’t have a PAN card then apply as soon as possible (if you are 18 years or above).
How To Invest In Stock Market For Beginners? ( Beginner’s Guide )
When you are new to the market, you enter with many dreams and expectations. Maybe you are planning to invest your savings and make pipes in return.
Although there are thousands of people who have made a fortune from the stock market, there are hundreds of thousands who have not.
Pay off debts like personal loans, credit card debt, etc., then pay them off first. The interest on these loans can be as high as your return on the market.
There is no point in wasting your energy to pay all the returns you made from the market as interest on your loans. Pay off these loans before entering the market.
A Beginner’s Guide To The Most Important Stock Market Terms
If you are planning to pay for next semester’s tuition, next month’s rent, savings for your daughter’s wedding next year or similar reasons, stop right there.
Just the amount of investment that will not affect your daily life. Moreover, investing in debt/debt is really a bad idea, especially when you are new and learning how to invest in the share market.
Cash on hand doesn’t just serve as your emergency fund. This is like your key to freedom. You can take big steps like moving to your small apartment, or quitting your boring job or simply moving to a new city, only when you have the money in hand.
Don’t invest all your money and then lose your freedom. Don’t sacrifice your personal freedom in the name of financial freedom.
Basics Of Share Market For Beginners
Now that you understand the basics, here are seven steps to learn how to invest in the stock market on your own. Follow the steps for an easy approach to enter the world of scholarship.
It is important to start by defining your investment goals. Start with the end goals in mind. Know what you want.
Want to grow your savings (capital appreciation) to beat inflation and earn higher returns? Do you want to build passive income from your investments through dividends? Are you investing for a specific purpose? Or do you just want to have fun creating wealth in the market?
If you just want to have fun and want to learn, that’s fine. But make sure you don’t invest too much or pay too much attention to the market? Besides, most people start the same way and then define their goals.
Book For Stock Market By Icfm India
Additionally, if you are starting out for Goal Based Investing, remember that the time frame for different investment goals will be different. Your goal can be anything like buying a new house, a new car, financing your higher education, getting married, getting married, retiring, etc.
However, if you are investing in your retirement, then you have more time than if you are investing in your first home purchase. Once you know your goals, you can decide how much you want and for how long you should stay invested.
Now that you know your goals, you need to define your strategies. You may need to figure out whether you want to invest in a lump sum (a large amount at a time) or through a SIP (systematic investment plan) approach. If you are planning small temporary investments, analyze how much you want to invest monthly.
There is a common understanding in our society that you need huge savings to get started. Say, one loop or higher. But this is not true. As a rule of thumb, first, build an emergency fund, and then start setting aside a fixed amount, say 10-20% of your monthly income for saving and investing.
Stock Market For Beginners In India: Few Terminologies To Keep In Mind
You can use the rest of your income to pay your bills, mortgage, etc. However, even if your allocated amount turns out to be Rs 3-5 lakh or more, it is good enough to build an investment habit.
Quick Note: Stockbrokers like Zerodha allow investors to plan their investments through Systematic Investment plans for stocks. Step 3: Read Some Investment Books
There are several great books on stock investing that you can read to brush up on the basics. Some good books I would recommend for beginners to read are:
Additionally, there are several other books that you can read to build a good foundation in the market. You can find the list of ten must read books for Indian stock investors here.
Share Bazar Guide India Basics Stock Market Trading Rules
Deciding on an online broker is one of the biggest steps you will need to take. There are two types of stock exchanges in India:
They are traditional brokers that provide trading, research, and advisory services for stocks, commodities, and currencies. These brokers receive commissions on every trade their clients execute. They also facilitate investing in Forex, Mutual Funds, IPOs, FDs, Bonds, and Insurance.
Discount brokers only provide trading facility for their clients. They do not offer advice and are therefore suitable for a ‘do-it-yourself’ type of client. They offer a low brokerage, high speed and flexible platform for trading stocks, commodities and currency derivatives.
Some examples of discount brokers are Zerodha, Upstocs, 5 Paisa, Smart Online Trading, Paytm Money, Groww, etc.
Stock Market Investing For Beginners: How To Make Money From Home By Trading Stocks Follow The Step By Step Guide And Discover Why You Need To Invest Right Now To Get Your First Profit
Read more here: Full service brokers vs discount brokers: Which one to choose? We will strongly recommend you to choose discount brokers (like Zerodha) as it will save you a lot of brokerage fees.
Initially, we started trading directly with ICICI (which is a full service broker), but quickly realized that it was too expensive when compared to discount brokers. It doesn’t make sense to pay more brokerage fees as long as you get the same benefits. And so we turned to Zerodha as our broker. (Related News: Different Charges on Share Trading Explained- Brokerage, STT & More)
Zerodha (a discount broker) brokers a commission of 0.01% or Rs 20 (whichever is less) on every order executed on Intraday, irrespective of the number of shares or their prices. For delivery, Zerodha has zero brokerage cost. So, the maximum brokerage you have to pay per trade while using the Zerodha platform is Rs 20 and it does not depend on the trade volume.
This is cheaper compared to direct ICICI (full service broker) which charges 0.55% brokerage on each transaction. If you buy stocks directly through ICICI for Rs 50,000, then you have to pay a broker Rs 275 for delivery trade, ie when you hold the stock for more than a day in your time account.
How To Trade In Indian Stock Market
Moreover, since this amount is charged on both sides of the delivery transaction (buying and selling), you will have to pay a total of Rs 550 for complete direct transactions in ICICI (more than Zerodha price).
In short, if you are planning to open a new trading account, we would recommend opening accounts at a discount broker to save multiple brokers. If you want to open your account with Zerodha, here is the direct link to fill the account opening application!
Start listening to companies around you. If you like a company’s products or services, dig deeper to learn more about its parent company, such as whether it is listed on the stock market, what its current share price is, etc.
Most of the products or services you use in your daily life – From soap, shampoo, cigarettes, bank, petrol pump, SIM card or even your underwear, there is a company behind everyone. Start researching them.
Stock Market For Beginners
For example- if you have been using HDFC debit/credit card for a long time and are satisfied with the experience, then research more about HDFC Bank. Information of all listed companies in India is publicly available. Just a simple ‘Google search’ of ‘HDFC