How to invest in share market - A step by step guide for beginners

How to invest in stock market in India
This post is written for a beginner in stock market who is making first investment in share market. Many people don't have much idea about how we can start investing and how much we can earn from stock market. Some comes to stock market thinking it is like a get rich quick scheme, invest without much thinking and lose their hard earned money.

What is stock market investing

Share market is a place where buying and selling of shares happen. Shares are small units of ownership of a company. You can buy those share through share market. When you buy a share of company you are a share holder of that company. Share market investing can give you good returns in long term. So starting to invest early can help you to create wealth for your future. 

How to invest in stocks

Well there are several ways to make money from share market. You can broadly classify them as trading and investing. Some say only long term investors create big wealth from share market. If you check history, you can find many trades and investors who created wealth from share market. But when you hear about stock market first name comes to our mind is Warren Buffet. If you are Indian, it will be Rakesh Jhunjhunwala. There are many other famous names also there who created huge wealth from share market by investing in stock market. 

Great Scientist Albert Einstein once said,

 “Compound interest is the 8th wonder of the world. He who understands it, earns it. He who doesn't pays it”. 

Investors utilise this magic of compounding and grows their money by investing in good stocks. Investors find value stocks, invest in it and wait for it to grow. To see the true magic of compounding in investment you need to give it enough time to grow.

There are various methods you can follow for investing, like investing in momentum stocks, value investing etc. Each method has its own advatanges and disadvantages. We will discuss about these investing methods in another post.

How to start share market investing in India

To start investing in stock market, first you need a demat account. We have made a video about things to consider while selecting a stock broker. Please check that if you need more info about that. 
Follow the procedure below and open a demat account first.
  • Prepare documents required to open a demat account.
  • Select a stock broker based on you requirement.
  • Open a demat account and trading account.
  • Decide how much to allocate to equity based on you financials.
  • Research and find stocks to invest.
  • Buy 
We will discuss these in detail below. Before investing first try to learn about share market investing and fundamental and technical analysis. Most of the investors follow fundamental analysis in investing. But you can combine chart reading and technical analysis with fundamental analysis for better entries and exits. 

Decide how much to invest in stocks

Share market investments can give you good returns. But there is risk involved in investing in stock investments. So you should first decide how much you can allocate to invest in equity investments. 

Find stocks for investing

How to invest in stock market in IndiaFinding a stock for investing is first and most important step in investing.

For that you need to study about company. First source to study about a company is company website itself. You can get basic details about company there. You can also find quarterly and annual reports there. You can find most of the information needed in these reports.
 There are many websites which makes this analysis and comparison of fundamental data easier.
 You can use to screen stocks based on fundamental data. You can also find fundamental data of stock there. Screener is one of the best website available for fundamental analysis of stocks. This site provides most of the things needed for analysis for free.

 Another site is . Beginners can use this site for some fundamental analysis studies. Its graphical interface helps beginners for some basic analysis. They analyse based on their algorithm and show a result. But dont rely completely on automated sites like these for analysis. But its good for starting stage.

There are many other things like management quality and other things before buying a stock for long term. We will discuss more about them in other posts.

 If you think these all are complicated and cant do analysis yourself, you can invest in any readymade theme based group of stocks like zerodha small case or fyers thematic investment.

Open fyers account and start thematic investing Fyers account opening link

Open zerodha account and start investing zerodha

Another option is to invest in mutual funds. Mutual funds are managed by professional fund managers. You don't have to worry about stock selection and all. They manage everything. Or you can invest in index fund also. Zerodha and fyers have direct mutual fund platforms which can help you to save commission while buying mutual funds. You can use links given above to open account there.

Upstox also has a good mutual fund platform. Open an account now Upstox account opening

Open a demat account

Once you find a good company or stock to invest, you need to open a demat account with any broker in India. There are mainly two types of stock brokers. Traditional brokers with brokerage based on total transaction and Discount brokers with low brokerage charges. You can open account with any good reputed broker. I have mentioned about documents required and other things in detail in post about upstox and fyers. Check them.



Upstox account opening link

Fyers account opening link

Charges involved for a demat account

 First charge for a demat account is account opening charge. Some discount brokers like upstox provide free account opening.
 Next is annual maintenance charge. This is charged by brokers yearly as maintenance charge for demat account. It is normally less than Rs.500 in most of the brokers. In upstox, zerodha and fyers it is Rs.300 only.

Things to remember while investing

  1. Check whether your basics covered. ie you have an emergency corpus, have adequate term plan and health cover. Then Identify your future goals and plan to invest accordingly.
  2. Then you need to decide how much you need to allocate to equity. Risk is always there in share market investments. So those factors also should be considered there. There are many other factors also to consider.
  3. Diversification is key in creating a portfolio. But how much diversification is needed. Diversification helps to reduce risk. But too much diversification may not give a good return and you may not be able to track all stock. So you need to balance it. 
  4. Which stocks you want to focus, dividend yield stocks or high growth stocks.
  5. Always buy stocks that you understand. Famous investors follow this strategy. You may have good knowledge about some sector or business. Try to find best value picks from there and invest. 
  6. It is better to avoid investing in penny stocks unless you find anything very special in that. A stock is penny because there is a reason for it. So better stay away from them. 
  7. Also avoid stock buying tips through sms, whatsapp and all. It is always better if yourself can research about a stock.
  8. We should be realistic about how much we can earn from stock market in India. You should be realistic about return from your investment. You know how much we can earn if we invest in fixed deposit or any other debt instrument. So compare stock investment returns with that only.
  9. Last couple of years, we have seen many stocks had big fall in its price. So always be vigilant about stocks you invest. News related to SEBI objections, default on bonds and auditing related etc can have big impact.
  10. In investing you should give time for a good stock to grow. You can never find top or bottom of a stock. But you can invest you total amount in parts at various levels. You may also buy good stocks as SIP also. If stock goes down soon after you buy you will be able to buy at lower level also and your average price will be adjusted there.
How to learn share market investing in India

You can find various articles and materials to learn online itself. As I said in earlier posts, zerodha varsity and fyers school of stocks are good place to start. Various investing and fundamentals books are available from famous authors. one upon wall street by Peter Lynch, intelligent investor by Benjamin Graham, thoughtful investor by Basanth Maheshwari are some good books on investing. You can find more books in our amazon page.

Check out our share market malayalam youtube page for more share market related videos in Malayalam

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