An individual who hasn’t invested in the stock market ever often rethink their decision of starting to invest in it as their mind is clouded by the losses made by other investors. Buying stocks for beginners might feel intimidating in certain ways. Well, we understand the fear and we are here to get you started with how to invest in the stock market for beginners. By the end of this blog, you will be acquainted with the best way to invest in stocks, how to invest in the stock market for beginners and the benefits of investing in the stock market.
What is Investment?
In simple words, investment is keeping aside a chunk of money with the expectation that it will grow over time. It is defined as the act of committing money or capital to an endeavour with the expectation of obtaining an additional income or profit. In this blog, you will learn how to invest in the stock market for beginners?
Where to buy stocks?
Stocks are listed and traded on stock exchanges, these exchanges are done with the help of intermediaries which are stockbrokers or online platforms. In India, the two prominent stock exchanges are NSE (National Stock Exchange) and BSE (Bombay Stock Exchange)
You can check out this link for more on BSE and NSE
How to open a trading account
As mentioned above, one needs a broker for buying and trading stocks, to get a broker you need to get yourself registered with a brokerage firm and they will assign you with a broker which will do the trading according to your own will.
To select the brokerage firm do compare the rates of various firms and decide accordingly, remember your first broker is not always your last broker.
The second thing required to open a trading account is to open a Demat account which stands for the dematerialised account, which allows you to hold a company’s shares and securities electronically.
In upcoming articles, we will we covering in-depth trading accounts and choose the right brokerage firm
How to buy your 1st stock?
Buying stocks for beginners doesn’t necessarily need rocket science, there is no best way to invest in stocks, just a few guidelines to keep in mind before investing. The following points cover the basics of how to invest in the stock market for beginners, these will help you in choosing your first share.
- An advice that we would like to give to a beginner is to start with what’s around, choose a company that you have known about and that there is no need to look for an ABC company in an ABC sector.
Here’s a list of some companies that you hear about every day
Personal care- ITC, colgateindia, Nykaa, P&G
Automobile- Maruti Suzuki, Tata Motors, TVS motors
Mobiles- Samsung, Xiaomi, Vivo
- The best way to invest in stocks is by starting small, your first investment should be under Rs5000 and have multiple shares. This will help you in gaining experience and help you sort the technicalities involved in buying your first share. Keep a person who has experience in the stock market in the loop and take advice from them.
A small investment will make sure that you don’t lose a lot, the chances of losing all the money you have invested are very less, in the worst-case scenario if your stock selection doesn’t work out you will still incur a small loss which will not affect you financially much.
If your stock selection works out then it will be profitable for you but don’t get too excited and increase the investment amount slowly and gradually. The most important thing is to be consistent and focus on not missing big opportunities.
Risks involved in STOCK-Market
There are multiple benefits of investing in the stock market, the main benefits being the profits but like any other investment it has its own risk factor, the main being the financial loss which can be big or small in amount, to make sure that your risk minimum:
- Check the financials of the company and their previous performance.
- Invest a small amount of money
- Invest in multiple companies
- Keep a close eye on the market trends
Just keep an eye out for the benefits of investing in the stock market.
Some online tools available to help with Stock Market:
- Moneycontrol’s Markets on mobile – Android, BlackBerry, iOS, Symbian, Windows Mobile.
- NSE Mobile Trading – Android, iOS.
- Stock Watch – Android.
- Yahoo! Finance- Android,iOS.
- Investar- Android, iOS.
Diversifying our portfolio
Buying stocks for beginners is one thing you need to abide by to never let your emotions make an investment decision for you and that there is no best way to invest in stocks. one thing that you do need to keep in mind is diversifying your market profile which is very important in terms of growth and so is holding on to quality stocks.
A lot of newbies think that diversification is for seasoned investors which is not the case, whether a beginner or an amateur investor diversifying your portfolio is very important as it helps the investor in situations where a particular sector has suffered due to macroeconomic reasons.
If one had just invested in the hospitality sector and the sector was impacted due to some reasons their portfolio would have taken a hit, to avoid such losses it’s better to invest in multiple sectors so that your portfolio is balanced.
Diversification helps in creating a balance which is not only helpful in the stock market but also in other investment sectors
Buying your 1st share can be a thrilling experience but make sure you are familiar with the basics and play safely in the beginning. Be patient with the process and you will automatically see the benefits of investing in the stock market.
Follow the guidelines while buying your first stock and take your time. Start small and continuously increase your investment amount. Always keep in mind the importance of diversifying and expanding your portfolio/investments in multiple sectors.