Investing in the stock market is getting in hype slowly and gradually, this field is coming up as a big time investment option which pays you back nicely.
But this option does come up with the high risk, and that is the reason why this is less talked about. People do look at stock market investment if they want to plan their retirement with good turnovers.
Let’s see some of the ways through which one can invest in the stock market and start their savings.
Before going in detail about How to Invest in Stock Market, let us know What is Stock & Stock Market?
What is Stock market?
A Stock Market is basically that place where this whole business takes place, shares are bought and sold by the companies.
It not necessary that it has to be a physical place only it can also be a virtual market where this selling and buying process can be done.
These places can be contacted by the stockbrokers by phone or online both the ways.
What are Stocks or Shares?
Basically stock is a certificate that says that now you have the part-ownership of the company and they are also called as shares or equity.
These stocks are generally released by the company for the public so that the company can raise some funds and the public can earn profit through these shares.
All the shares a company release do have some little amount of ownership of that particular company which is bought by the people, and they become the part-owner of that company by that much percentage.
Who is a Shareholder?
The person who buys shares from the company and becomes the part-owner is called as a shareholder.
They can basically buy one single share or can have millions of them in both the conditions they will be called as the shareholder in the company by a certain percentage.
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How to invest in stock market?
Let’s see the procedure through which one can invest in the stock market effectively, there are certain steps which are necessary to invest in the stock market.
Education & Practice Virtual Trading
Before venturing in the stock market one needs to know all the tricks of the game.
Learn a lot about trading strategies via various market related books or increasing your information through online portals or by following some of the most influential investors.
Once you have done you education part you must start playing virtual trading.
There are many apps & web portals available for virtual trading. Virtual trading will help in practically using your strategy with virtual money.
Virtual Trading will increase your confidence & will help you learn practical stuffs before investing your real money in the market.
Choose a Stock Broker
A second step to invest in the stock market is to choose a perfect stock broker who can help you get the right investment in the stock market.
Stock broker is basically a bridge between you and the exchange through which you will get into the trading. You should consider a lot before choosing a good stock broker for yourself.
Your decision will be based on what type of Broker to choose – Full Service Broker or Discount Broker, what charges the broker levies on the traders, what are the services they provide, their review in various review portals.
In the process of investing in the stock market, one needs to pay many additional charges like brokerage charges, account opening charges, stamp charges, securities/commodities transaction tax, SEBI charges.
And these charges will only be discounted by the stock brokers. If you will select the good broker he might get you many of these charges waived off or discounted.
Open a Demat Account
To invest in the stock market effectively one need to open demat account first, and have the trading account also through which it will be possible to invest in the stock market.
To open up these accounts one need to have the necessary documents ready.
- Address proof, which can be passport, Adhaar card, ration card, voter id, rent agreement or the driving license.
- Income proof, if one want to invest in any other area other than cash market or the equity ones then they do need, form 16, latest salary slip, ITR, almost 6 months bank statement.
- Cancelled cheque of the particular bank you are selecting to get linked with.
- Your photographs.
- And the pan card of the applicant.
These are some of the main documents which are basically demanded by the bank, although there are exceptional cases in which any other document can be demanded
Create a winning Investment Strategy
Once you have decided the broker and started investing in the stock market, and invest an ample amount of time on trading, then you will learn all the process of investing money in the market.
This is the time when you will actually start earning the money, you will be able to make strategies which will help you earn more money.
You will understand when you need to invest more money, when you need to take out your money. So set your exit and entry rules as per your research.
After successfully completing certain trades, you will be able to predict your next move automatically and will keep on trading successfully.
Best Practices to Invest in Share Market
Here are some of the best practices to invest in Share market:
- Always maintain a Diversified Portfolio
- Invest with caution, use tools like Stop Loss & Hedging
- Invest in Blue Chip Stocks
- Stay updated with latest news like market news, company specific news, sector specific news, world news
- Invest in industry or sector you understand
- Follow investment strategies of Influential investors
- Continue Learning & Reading about Investment Strategies
These are some of the basic steps, which will help you to start investing in the stock market. Learning trading is not a rocket science practicing it will make you perfect in trading.
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