What is stock market investing
How to invest in stocks
“Compound interest is the 8th wonder of the world. He who understands it, earns it. He who doesn't pays it”.
Investors utilize this 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 investing you need to give it enough time to grow.
There are various methods for investing like investing in momentum stocks, value investing etc. We will discuss about it in another post.
How to start share market investing
- 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.
Decide how much to invest in stocks
Find stocks for 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 https://www.screener.in/ 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 www.fundata.in/ . 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 your self, 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
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.
Upstox has a good mutual fund platform also. Open an account now Upstox account opening
Open a demat account
Charges involved for a demat account
Next is annual maintenance charge. This is charged by brokers yearly as maintenance charge for demat account. In fyers, Annual maintenance charge or amc is also free.
Things to remember while investing
- 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.
- 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.
- 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.
- Which stocks you want to focus, dividend yield stocks or high growth stocks.
- 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.
- 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.
- Also avoid stock buying tips through sms, whatsapp and all. It is always better if yourself can research about a stock.
- 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.
- 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.
- 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.
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 shop section or our amazon page.
Check out our share market malayalam youtube page for more share market related videos in Malayalam