How to Invest in Share Market?

Investing in the stock market has never been so popular. As awareness about investing and the stock market grew with time it was no surprise that people from all sections and financial backgrounds, irrespective of their age or income, started taking a deep interest in the stock market. Investing in the stock market is easier than it seems.

For years, Indians have been shy about participating in the stock market. The stigma is broken now, as more and more investors join every day. The option to invest online has changed everything. Such is the ease of investing in the stock market, even if you have zero prior knowledge about the stock market, it will take you just a few minutes to create your Demat and Trading A/c and start investing.

What is the Share Market?

A share market is a place where stocks/shares/securities are bought and sold. Securities are financial instruments that have a value associated with them. The share market, also known as the stock market, is a place where all companies and various types of financial institutions are listed, and an individual can buy a portion of their ownership (known as shares) in a company of their choice. You can not only buy and sell shares you can also trade on various shares and assets in the stock market.

How to Invest?

For years, stock market investments have proven to be consistent and growth worthy. Today, in the age of a digital world, investing is a child’s play. Investing in the share market requires following a few simple steps and you will be ready in no more than a few minutes to start investing. Let us understand these steps one by one in detail to help you start your investment journey in the share market.

  1. Requirements to Invest in the Share Market
    • To start investing in the stock market the most important thing you need is a Demat & Trading account.
    • Next you need to choose a stockbroker like Bajaj Financial Securities Limited and create your Demat & Trading account to start investing.
    • You will also need a Bank Account that you will link with your Demat & Trading A/c to add funds and withdraw funds.
  2. Documents Needed
    • Proof of Address (e.g., Aadhar card)
    • Proof of Identity (e.g., Aadhar card)
    • PAN Card (Financial Proof)
    • Cancelled Cheque

Investment Process

The process to invest in the stock market requires only a few clicks through online platforms. You can invest from your phone, laptop, PC, etc., Investing simply means buying stocks and holding them for your desired time till you achieve your target. An investor will select the stock of their choice and decide the quantity of the stock as well. Once ready, they will put a buy order on the exchange/market. When the broker finds a seller who has offered to sell the same quantity of shares in the market, they will execute your order and the necessary amount will be deducted from your Demat & Trading a/c while the shares will be delivered to your Demat a/c within 2 days of the transaction. As the share value increases you will make some amount of profit through that.

Investing in the Primary Market (IPOs)

Investing in the primary market or IPO means that you are investing in a company or its share before they are publicly listed in the stock market. A company when it requires money to expand its business goes to the public to ask for money. This is known as an Initial Public Offering or IPO. This provides a unique opportunity for retail investors to buy shares at a discounted price if they feel that the company has the potential to grow, which will directly impact its share prices.

To participate in an IPO, you need a Demat & Trading account with a stockbroker. Once the date of the IPO application is announced you apply through your Demat & Trading account based on the minimum investment amount decided for that IPO (usually it is between Rs. 14000 to 15000). IPO allotment is done in a lottery system and if an investor gets the allotment the shares are electronically delivered to their Demat accounts. Investors can sell the shares once they are listed in the share market to earn a profit. They can also hold on to their investment for as long as they want.

Investing in the Secondary Market

The secondary market is nothing but the stock market. So once the shares are listed on the stock exchange. Anyone can buy and sell those stocks or in other words trade on those stocks. Investing in the secondary market is analysing the stock that you want to purchase. While analysing you need to keep a check on the past performances, growth potential in future, and company financials among several other factors. This type of analysis is popularly known as Fundamental Analysis. Investors buy potential stocks and hold on to their investments till their desired target is achieved. The secondary market not only offers simple buying and selling of stocks it also offers other options like intraday trading , derivatives trading, etc.,

The only thing you require to invest in both primary and secondary markets is a Demat & Trading A/c and you can start investing in a few minutes.

Things to Keep in Mind Before Investing in Stock Market

There are several factors that you should consider before you start investing. Remember, investing is putting your hard-earned money into an asset, and it will always be wise to do your due diligence before you invest. Let us understand a few factors that you should consider before you invest.

Your Risk Appetite

Understanding your risk appetite is extremely important before you start investing. The stock market can provide attractive returns on your investments, however, if you are taking more risks than you can afford then it can backfire on you. Be completely aware of the capital you want to invest and take good care of that by investing in well-researched stocks.

Set Your Goals and Diversify Your Portfolio

Setting your goals in advance is always recommended by professional investors. If you are not aware of the target you want to achieve on a specific investment you may end up waiting for too long or may end up selling your investments too early. The time duration for your investments is also something that you should factor in advance. Your investment goals should be realistic and well-researched. In today’s day and age when you get AI and expert-picked investment stock baskets from brokers like Bajaj Financial Securities Limited, your job as an investor gets simple.

You have certainly heard of the phrase “do not put all your eggs in the same basket”. Building a portfolio is very similar to this. You should always diversify your investments. When we say diversify you need to invest in stocks of different sectors. If the market for a specific sector is not performing well and you invest all your money in the same sector, then your portfolio can take a hit. It is wise according to pro investors to diversify investments.

Conclusion

Investing has the power to change the course of your financial future. If you put in a little effort and consistently invest depending on your risk appetite you have great chances of being profitable. Investing is an empowerment tool that almost anyone can use to elevate the standard of their financial status.

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