How To Start Invest In Stock Market For Beginners?
If talked about investing in stock market, then in the last 3 to 4 years, there has been a huge increase in the popularity in India, and there are some main reasons behind the trend of people in the stock market
1. Easy to buy and sell stocks in real time with the help of a smartphone, software etc.
2. Increasing Stock market Index – Sensex up 35 thousand, and Nifty over 10 thousand
3. Information regarding share market is available on the mobile internet,
4. Greater profit potential than other investment options like bank deposits, gold etc.
If you also want to start invest in stock market, but you do not understand how to start invest in stock market, then read this article after reading this, you can easily start investing in stock market.
In this post, you will know these 5 important points to Start Invest in stock market
1. What documents should you have to start invest in stock market?
2. What type of account do you need to open for start invest in share market?
3. How much money would you need for start invest in stock market?
4. How to buy and sell stock in the stock market?
5. How will you make a profit by start invest in stock market?
What documents should you have to
1. PAN CARD (PERMANENT ACCOUNT NUMBER )
In order to start invest in the stock market, you must first have a PAN card, this 10 digit account number is an important document issued by the Indian Income Tax Department, and PAN number is required for any financial transaction in India,
And if you have not yet made a PAN card, then you can make it easily from online.
2. KYC DOCUMENT (KYC Document)
KYC’s Full form is – Know your customer, and under KYC, you are requested for Updated KYC Documents of Aadhaar card and other Address proof.
3. INTERNET BANKING
To pay for any stock you buy, you will have pay to your broker, and your broker will reach your stock exchange, and then the stock you buy will be credited to your demat account. You will have to first deposit money in your corresponding trading account to buy stocks, and when your stock is sold, your broker will deposit money in the same trading account in lieu of the share.
What type of account do you need to open for start invest in share market?
Selection of Stock Brokers:-We cannot buy or sell stocks direct from stock exchanges (BSE or NSE), order to buy or sell stock up to the stock exchange is completed by a stockbroker.
And so to buy stock we need a stockbroker to start investing in the stock market, the stockbroker is an agency which is authorized to buy and sell stocks on the stock exchange, such as Share Khan, Zerodha, Angel Broking, ICICI Direct, and others.
With the help of a stockbroker, we can buy or sell stocks and when we go to a stockbroker in connection with starting a stock market, it opens two accounts for us-
Demat Account – Demat account is the account that should be started to buy or sell shares in the stock market. Demat Account is an account that allows investors to hold their shares in an electronic form. Stocks in Demat account remain in dematerialized form.
Trading Account – The buying and selling of stocks is done with the help of a trading account,
In this account, we get a User Id and Password, with which we order the stockbroker software to purchase or sell the stock
The stockbroker, which charges you for your services, is called a brokerage, whenever you choose a stockbroker, compare the services offered by the stockbroker and its brokerage with the other stockbroker in the market. , So that you pay less and you get the service even better.
There are two type of Brokers
Full-Service Brokers– Full-service brokers who provide advisory and trading facilities in stocks, commodities, and currencies. These brokers charge commission in percentage terms on the total amount of trade clients execute. Full-service brokers operate out of many offices and branches across the country, which clients can visit in case of any query. ICICIDirect, Kotak Security, HDFC Security, Sharekhan, Motilal Oswal, India Infoline are some of the full-service brokers.
Discount Brokers– Discount brokers just provide a trading platform to investors but no advisory. Discount brokers charge low brokerage. Discount brokers offer low brokerage, highspeed and the state-of-the-art execution platform for trading in stocks, commodities and currency derivatives. Over the last few years, discount brokers have established themselves in the market and are giving a competition to full-service brokers who have been in the industry for quite a long time. Zerodha, Upstox, Trade Smart online, Pro Stocks are some of the discount brokers.
How much money would you need for start invest in stock market?
The new investor, who wants to start invest in stock market, has many questions in mind, in which there is a major question-
What is the minimum amount of money he needs to have for start investing in stock market, and whether like the minimum balance in the bank account, does he need to keep a minimum amount of deposit in the share market?
So I’m sure that you do not have any limit for any kind of minimum investment in the share market, you can buy 100 rupees, whatever you want to buy, And some kind of money is needed, there is no such Limit,
There is also a question in the minds of some people that there is a minimum balance to keep in Demat Account.
So here you will also want to make sure that – First of all, you understand that Demat Account only shares or stocks, no money,
Therefore there is no question of keeping more or less money in
Trading Account, on the other hand, with the help of which you purchase the shares purchased to your broker, you want the same amount in your trading account, as much as you want to buy the stock,
And here even in the Stock Broker Trading Account, there is no mention of any minimum account of balance maintenance.
How to buy and sell stocks in the stock market?
The new investor, who wants to start invest in stock market, has many questions in mind, in which there is a major question-
How do we buy and sell stocks?
When you open your Demat Account and Trading Account with a broker, your broker will give User Id and Password for Trading Account to buy and sell stocks.
Whether you are in the stockbroker software or user Login in that user Id and password,
And with the help of User Id and Password, the 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 stock exchanges complete the order, you get a confirmation message to complete the order to buy that stock,
There are two types of trading in the share market, intraday trading and delivery based trading,
1. Intraday Trading
Intraday trading deals with buying and selling of stocks on the same day, during the trading hours that are stipulated by the exchange. If you want to do intraday trading, you will have to choose the option of intraday when you buy or sell a stock in your trading account.
2. Delivery Trading
When you want to keep a purchased stock with you for a few days, or for as long as you want, then the order for the purchase of such shares is called Delivery Trading,
And for this, you will have to choose the option of DELIVERY when you order to buy stocks, in your trading account,
So when you start trading in the share market, first think of what type of trading you want to do intraday or delivery trading.
How will you make a profit by start invest in the stock market?
So here I would like to tell you the company stock you buy, and the amount of money you are giving to that company as a capital, and you have purchased your shares in that company’s business According to the quantity of stock you buy than your becomes a partner in the profit and loss earned by that company,
There are two major advantages of any business –
1. The company making the profit.
2. The total value of the company’s assets and the increase in capital.
And in the same way, when you buy a stock you get these two benefits
1. Dividend income
Any profit the company earns, that benefit is given equal shares in the shareholder who buys the shares of the company, and when the shareholder gets a share of profit from the company, then it is called dividend
For example – if you purchased 500 shares of XYZ company at a price of 100 rupees, and the company decided to give a dividend of Rs 5 per share, then the benefit you get will be
500 shares x 5 per share profit = 500 rupees,
In this way, you can see dividend income as a passive income, because you only buy stocks and keep them in your account, you do not have to do anything else, and as the company earns the profit, Deposit your share into your bank account, which is tax-free income.
2. Capital appreciation
You can understand the increase in the company’s capital as an increase in the stock price of the company, and as the company’s capital increases, and the ability to earn its profit and its assets increase, its debt In such a situation, the stock price of that company continues to rise, and if you have already taken stock of that company at a fixed price, then whenever you want the shares or stocks of that company The De earn profits by selling on price,
Like – you bought 500 shares of ABC company at a price of 100 rupees and invested a total of 100 X 500 or 50 thousand rupees and now the company is doing a very good job and its share of the shares from its share of capital and capital increase Increases,
And people want to buy more of that stock, and if the demand for that stock increases, the company’s share price goes up to 1000 rupees in 1 year,
And in this case, you also want to get the benefit of the increase in the share price of the company, if you sell 100 shares that you bought with 500 rupees, then the benefit you get will be
100 shares x 1000 per share = 100000, today’s total cost.