How to start investing in stock market

If we talk about investing in the stock market then in the last 4 to 5 years, the trend of People has increased significantly in India and there are some main reasons behind the trend of People in the stock market-
1. Internet banking, increasing number of users using mobile banking
2. Possible to buy and sell stocks in real time through mobile
3. Increasing Stock Market Index – Sensex above 35 thousand, and Nifty above 10 thousand
4. Information related to the stock market is available on mobile internet
5. Possibility of higher returns from other investment options (bank deposits, gold)

Now in such a situation, if you also want to start investing in stock market investment but you do not understand how to start investing in the stock market then after reading this post. You can start your stock market investment easily-

In this post we will know these 5 important things to start stock market investment –
What document do you have to invest in stock market?
What kind of accounts do you need to open for stock market investment?
What is the minimum amount of money you will need for stock market investment?
How to buy and sell stocks in the stock market?
How will you be able to make a profit by investing in the stock market?


Let us know firstly-
What document do you have to invest in stock market?
* PAN CARD
To invest in the stock market, you must first have a PAN CARD, the full form of PAN CARD is PERMANENT ACCOUNT NUMBER and this 10 digit account number is an important document issued by the Income Tax Department of India and PAN number is required for any financial transaction in India. And if your PAN card is not ready yet then get it made and you can send the application online on NSDL website to make it.

* KYC DOCUMENT
By the way, nowadays KYC is also done for bank accounts from time to time. KYC’s FULL FORM – Know your customer and under “KYC” you are asked for UPDATED KYC DOCUMENT of Aadhaar Card and other ADDRESS PROOF.

* INTERNET BANKING
To pay for any stock or shares that you will buy, you will have to pay to your broker and your broker will pass your money to the seller of the shares and will deposit the shares you bought in your demat account.
To make a payment to your broker, you will inevitably need an online internet banking account through which you can pay your broker for all your payment records. The stock broker opens an account which is called a trading account. To buy stocks, you have to first deposit money in this trading account and on selling shares, your broker will deposit money in this trading account in exchange for shares.

* Select Stock Broker
You or I cannot buy or sell stocks directly from the stock exchange (BSE or NSE). In order to buy or sell our stock up to the stock exchange is fulfilled by a stock broker. And so to buy stocks or shares, we need a stock broker to invest in the stock market.
A stock broker is an agency that is authorized to buy and sell stocks on the stock exchange, such as Sherkhan, With the help of Angel Broking, ICICI Direct and other stock brokers, we can buy and sell stocks or shares. When we go to a stockbroker to start investing in the stock market, he opens two accounts for us.


What type of accounts do you need to open to invest in the stock market?
* Demat Account – We essentially require DEMAT ACCOUNT to keep the purchased shares with us. The shares or stocks purchased in this account remain credited in electronic form and are debited from this account on sale.
* Trading Account – Trading and buying of shares is done with the help of a trading account.In this account we get a USER ID and PASSWORD with the help of which we place an order to buy or sell stocks using stock broker software or SYSTMEM.

Keep in mind – the fee that a stock broker takes from you in exchange for its services is called a brokerage. Whenever you choose a stock broker, compare the services offered by the stock broker and its brokerage with other stock brokers in the market so that you pay less fees and you also get better service.


What is the minimum amount of money you will need for stock market investment?
There are many questions in the mind of a new investor who starts investing in the stock market:-
How much money should he have at least, and does he need to keep a minimum amount of money in the stock market like a minimum balance in a bank account?
So, I assure you that you do not have any kind of minimum amount of money to invest in the stock market, you can buy 100 rupees, 500 rupees. Whatever amount you want to buy, there is no limit to the minimum amount of money required.
Secondly, there is also the question in the mind of some people that whether there is any minimum balance in DEMAT ACCOUNT or TRADING ACCOUNT.
So, here I also want to make sure that – First of all you should understand that only shares or stocks are deposited in DEMAT ACCOUNT not (money).
So, there is no question of keeping more or less money in DEMAT ACCOUNT.
On the other hand, TRADING ACCOUNT with the help of which you pay the shares purchased to your broker, you need as much money in your trading account as you want to buy the shares.
And here too, stock broker does not say to maintain any kind of minimum account balance in trading account.


How to buy and sell stocks in the stock market?
There are many questions in the mind of a new investor who starts investing in the stock market:-
How do we buy and sell stock?
So, let me tell you that buying and selling stocks today is as easy as sending a message from MOBILE to SMS or WHATSAAP groups. When you open your DEMAT and TRADING account with a broker, your broker will give you the USER ID and PASSWORD of TRADING ACCOUNT for buying and selling stocks. You log that user ID and password in stock broker software, whether it is on computer or mobile. And with the help of user ID and password, you place an order to buy and sell the stock to your broker and the broker sends your order to the stock exchange (BSE or NSE).
And as soon as the stock exchange completes the order, you get a confirmation message of the order to buy that stock.

Keep in mind,
There are two types of trading in the stock market, intraday trading and delivery based trading,
Let’s know first –
1. Intraday Trading – In this, you do not actually buy the shares to keep with you, rather you just want to take advantage of the fluctuations in the share price and earn profit. And so on the day you place an order to buy shares, you also sell the same day. And in this way, if you want to do intraday trading, then by logging into your trading account, you have to choose the option of intraday when placing an order to buy the stock.

Now the second type of trading is –
2. Delivery Based Trading – When you want to keep the purchased stock with you for a few days, or for as long as you want then the order for the purchase of such a share is called Delivery Based Trading. And for this, you have to log in to your trading account and choose the option of DELIVERY while placing an order to buy the stock.

Note – Stocks or shares purchased in Delivery Based Trading except the day you actually buy the shares, will be credited to your DEMAT ACCOUNT within the next two days (T+ 2 days). And in such delivery based trading when the shares are actually deposited in your demat account then only then you sell it.
So, when you start trading in the stock market, first think about what kind of trading you want to do – intraday or delivery trading.


How will you be able to make a profit by investing in the stock market?
There are many questions in the mind of a new investor who starts investing in the stock market about the profit share-
How will you make a profit by investing in the stock market –
So, here I would like to tell you that – the company whose stock you buy and the quantity you buy, you are giving that much money in the form of capital to that company and you can buy your share in the business of that company.
According to the quantity, they become shareholder / partner / owner in the profit and loss earned by that company.
And just as the owner of a business has two major advantages, you also get both the major benefits by buying stocks or shares, now which are these two benefits-
There are two major benefits in any business –
1. The company that is making profit, and (Profit of Business)
2. Capital Appreciation of company’s assets

And in the same way when you buy stock or shares of a company, you get these two benefits –
* Dividend income
Whatever profit the company makes, the profit is distributed equally to the shareholder (SHARE HOLDER) who bought the shares of the company. And when the shareholder gets a share of the profit from the company, it is called a dividend (DIVIDEND).
Like – you bought 100 shares of XYZ company for Rs 100 and if the company decided to give a dividend of Rs 2 per share, then the profit you will get will be 100 shares x 2 profit per share = Rs 200.
In this way, you can see dividend income as a passive income because you just buy the stock and keep it in your account, you don’t have to do anything else and as the company earns profit, it will give you Deposits your share in your bank account which is tax free income.

* Capital Appreciation
You can understand the increase in the capital of the company as the increase in the stock or share price of the company. As the company’s capital increases and its ability to make profit and its wealth increases, its debt decreases. So, the stock price of that company keeps increasing and you have stock of that company in a certain, the price is already taken so that whenever you can make a profit by selling the shares or stocks of that company at an increased price.
Like – you bought 100 shares of XYZ company with a price of Rs 100 and invested a total of 100 X 100 i.e. 10 thousand rupees and now the company is doing very well and due to the increase in its wealth and capital its share price Increases.
And people want to buy that stock more and more and the demand of that share increases the price of a company’s share to Rs 200 in 1 year.And in such a situation, you also want that if you also get the benefit of increasing the share price of the company then you sell the 100 shares you bought at the price of Rs. 100, the profit you will get will be 100 shares X 200 per share = Rs 20,000, today’s total price. And you had invested a total of 10 thousand rupees, instead of which you are getting 20 thousand today.
In this way you will benefit – 20 thousand -10 thousand = 10 thousand rupees.

I hope that after reading this post on investing in the stock market, you have got to learn a lot and if you like this post then write your questions and comments below. Thanks for reading this post.

3 thoughts on “How to start investing in stock market

  • October 15, 2020 at 12:38 pm
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    Thanks for the useful information.

    Reply
  • October 17, 2020 at 5:59 am
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    Please suggest which demat account is best.

    Reply
    • October 17, 2020 at 6:49 am
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      You can go with Zerodha Demat account.
      Zerodha is the biggest and most believed markdown specialist with a user base of more than 30 Lakh. The most compelling motivation for Zerodha’s prosperity is its customer care which is superior to all other discount brokers.

      Reply

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