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How to Invest in Stocks in India (FOR BEGINNERS)

SEBI registered stock advisory

SEBI registered stock advisory

Investing in the stock markets is easy if you know the right method. Newbies are always found to ask the question, “How to invest in stocks in India?” Stock investing is a whole process, and there are many complex steps involved. There are also some simple techniques you can use that help minimise the risk factor.

1. Prerequisites Before You Invest in Stock Market in India

Here we look at the prerequisites before you invest in the share market in India.

  1. Bank Savings account

We need a bank account to link with our demat account for pay in and payout of funds while selling and buying stocks. As you are choosing to invest in stocks, you will be buying and selling them over time. For this, you will require a bank account that is linked to your demat account. This ensures that money flows in and out of your account seamlessly while you trade. This is mandated by most brokers with whom you will choose to open a demat and trading account.

  1. Demat account

When it comes to investing in stocks for beginners, you cannot do so without having both a Demat. A demat account is that which will hold one’s shares in the name of the account holder. A demat account serves as an electronic house for your shares. Banks , brokers also offer Demat account services to their investors. Opening a Demat account is a hassle-free process that can be carried out from the comfort of one’s home within a matter of minutes.

Find the right broker

Choosing your stockbroker is not much different from picking a stock. It starts with knowing your investing style. Retail brokers fall into two basic categories: full-service brokers and discount brokers. Full-service brokers routinely offer individual advice and recommendations, and these services don’t come cheap. Discount brokers generally leave you to make your own decisions. Some recommend a full-service broker for new investors. 

Questions to Ask Your Broker

  • Fees, commissions, or a combination?
  • What other charges do you or your firm have—transaction fees, account maintenance fees, etc.?
  • Are you or your firm associated with any of the companies whose investment products you might recommend?
  • Will I have access to my account online?
  • How often will I receive statements?

It depends on your requirement which broker you should opt.

Documents Required For Investing In Stocks

  • PAN Card
  • Aadhar card (for address proof)
  • Cancelled cheque/Bank Statement/Passbook
  • Passport size photos

2. Define Your Investment Goals –

Investment goals are not just about the money you can make – it is what you can afford to lose as well. Thinking about your investment goals before investing helps you think about whether or not investing in a particular asset class is in line with your goals. There are different investment goals that some people have and others do not; it all depends on your personal beliefs, values and tolerance for risk.

Amount required on maturity

Most people will spend hours searching for information to help them achieve their financial goals. They follow tips and guidelines on investments that don’t suit their risk tolerance, afraid of the risks associated with higher rates of return. What if there was an investment you could make that would allow you to fulfill your financial goals and at the same time enable you to sleep comfortably at night?

The time value of money is a financial concept that refers to the idea that money available now is worth more than the same amount in the future because it can be invested to earn interest. In finance, we use different methods to evaluate the worth of an amount of money at a future date. The biggest fear for new investors is losing their hard earned money. The first step towards successful investment starts with setting profitable goals and an accurate plan to achieve those goals.

Amount available for investment

When it comes to investing, how much money you have available is a very important factor. The amount of cash you have available will ultimately decide what type of investment portfolio you choose. By defining your investment goals, you will be able to concentrate on investing for that particular goal. Deciding what investment portfolio will suit your investment needs will then gradually fall into place.

Risk you can bear

As a value investor one thing you must do is carefully manage the risks involved with investing. There is always going to be some element of risk when it comes to investing, whether it’s related to a company, an economy, or the stock market. The question that needs to be answered before making an investment is, “How much risk can you bear?”

The first step towards achieving financial freedom is risk assessment. You’ll have to decide how much of your savings you can afford to put at risk in pursuit of aggressive growth. Many investors don’t really understand their risk tolerance and this is one of the main reasons they lose money. However, there are things you can do to determine your risk tolerance faced with a variety of investment options.

Returns expected

There are multiple reasons why you might want to invest your money. Some people want to invest it in order to build up their wealth and make more money, while others hope to one day use their investments as an income stream that they get regular payments from, like a pension. 

No matter what your aim is, there are different investment options available depending on what goals you have for your money. Before you decide on which investment strategy is best for you, you need to understand what your goals are and then match them up with the relevant types of investments.

3. Stock Selection

One of the most important criteria for success in the stock market is stock selection: that is, identifying companies, which will flourish in the years to come, and then getting in at a price that won’t be too painful if they don’t.

The Indian markets have shown an interesting performance curve over time, with a boom-and-bust cycle clearly visible. In doing your homework before you invest, it is important to bear in mind how this will affect your investment. This is particularly true considering how volatile the Indian market can be; it makes diversification even more important, especially since companies do not offer much by way of fixed return security anymore, but that is a debate for another day.

Stock selection is an important aspect of stock investing. It involves identifying a list of stocks that you think will do better than the market benchmark or index. There are different ways to identify good stocks. These methods can be broadly classified as quantitative or qualitative techniques. Quantitative techniques involve statistical analysis and data crunching to evaluate the prospects of a company. Qualitative techniques, on the other hand, involve use of fundamental indicators (and in some cases, quantitative metrics) to select stocks that are good buys.

4. Build a diverse portfolio

If you are looking to invest in stocks, then you must know how to create a diversified portfolio. It is not enough to build a one-stock portfolio and expect it to deliver remarkable returns for you. The goal of investing in equity is to build wealth and achieve growth over a long period. To do this effectively, you need a strong foundation, which will only be possible if you diversify your investment portfolio.

The reason to invest in stocks is different for everyone. In addition, there are as many opinions on how to invest, as there are kinds of investors. Some choose to invest with a few stocks while some diversify their portfolios across several hundred. There are those who follow the market, and others just pick up what they like and think will do well. A diverse portfolio can potentially minimize your risk and give you better chances at maximizing your gains. The key to a diverse portfolio is having a mix of investments in different markets, countries and asset classes.

5. Select a Platform to Track Your Performance

Being an investor in stocks, you must know what the best way to monitor your performance is. There are a number of sites that offer good features to keep a track on stocks and shares. You will be confused when someone recommends one platform while another one praises another platform zealously.

Thus, it is important that you perform some research on your own and find out the one platform that would suit all your investment needs. There are varieties of websites out there to help novice or professional investors track their performance. Which platform you choose depends on your strategy, trading frequency and risk tolerance.

How we can Help

Multibaggers.co.in is a leading SEBI registered stock advisory that gives you best stocks to buy for investment to make a proper portfolio that gives you immense risk with minised risk. So once done with basic steps of opening a demat account you can contact for best stocks for superb portfolio building according to your risk reward and build huge wealth. 

Here at Multibaggers.co.in we provide Long term Investment Stock Calls, Stock trading short term tips, Intraday trading tips, Stock market courses, Index trading Tips in futures and options. 

Our strength lies in delivering the returns for different clients with different risk return profiles.