How To Invest in Share Market For Beginners

 Imagine this: A man's company is knee-deep in debt from banks and creditors. But when he opens up his company to the common man, other people invest in the company and become part owners in the process. These owners together invest money and work towards making the company debt-free and profitable.

How do so many people own a single company? If one man started the company, what role do these people have? Why would someone prefer taking money from people and making them part owners instead of just borrowing from banks? And how good is this option for the common man as an investment? What are the things he should take care of before investing in a company? These are some of the questions, the answers to which will help you understand share trading in India. 

 Documents Required For Investing In Stocks

• Your PAN Card
• Your Aadhaar Card
• Your name on a canceled cheque from your active bank account
• A proof of your residence based on a list of documents that have been accepted by your broker, depository participant, or bank
• Documents detailing that you earn an income
• Passport-sized photographs of you

Understand The Basics Of The Stock Market

Once you have picked aside, the next step in how to invest in the stock market is to get the basics right. Get the basic idea of what BSE, NSE, Sensex, and Nifty are. Try to know more about what stocks are, stock market timings, who is a stockbroker, how the market moves, etc. to get a general idea about the market.

In the bid to make quick money, most beginners often skip learning the basics. But if you are unaware of the basics, it will not be possible for you to build your own trading/investing strategies. Spend at least a few days mastering the basics so that you actually know what to do once you get yourself a trading account.

Goals

You need to be clear beforehand about your investment goals – what you want to achieve by investing in stocks and when. Make a list of your needs like child's education, daughter's wedding, funds for a house, or retirement money. Then invest in stocks that are most likely to give you good returns when you need them.

Control Over Emotions

One of the primary requisites of investing in the stock market involves controlling your emotions. The market sentiment towards a company becomes evident through the price of its shares. For instance, if most investors are skeptical about the prospects of a particular company, the prices of stocks and shares will reduce. Similarly, when investors show confidence in a particular company, the prices of its stocks and shares will increase. Investors who are positive about the market are called “bulls” and their negative counterparts are called “bears”. The change in prices of shares is affected by the persistent conflict between the bears and bulls, and the short-term changes in prices are influenced by speculations, rumors, and emotions instead of systematic analyses of the prospects, assets, and management of the company.

As stock prices keep changing, investors start to feel insecurity and tension, creating questions like whether or not they should sell their stocks in order to avoid losses or if they should retain the shares and hope for a rebound in prices. Since actions are primarily driven by emotions, it is essential to ensure that all factors are analyzed carefully before making a final decision.

Also Read:-Habits of Highly Sucessful Stock Market Investors

Avoid Using The Margin Facility

Lack of capital is one of the most common problems for stock market traders. To help traders with this problem, stockbrokers now offer a margin facility. For instance, a broker can provide you with a margin of 5x on your capital. This means that if your trading capital is Rs. 1 lakh, you can still buy shares worth Rs. 5 lakhs.

However, trades placed with margin are generally required to be squared off before the market closes on the same day. While the margin facility may be beneficial for professional traders, beginners should avoid using it as it could result in severe losses. Only trade with the capital you have and use the margin facility after gaining some experience.

Don't Buy or Sell on a Whim

Hot stock tips sound great, but they don't always work out the way you plan. Buying or selling on a whim can be a costly mistake. Outside of regular, automated investing, it's a good idea to do some analysis before making an investment decision. Fundamental analysis is a good way to decide if a company is worth buying or selling. Technical analysis uses recent market activity to help decide if a stock is going up or down.

Learn From the Experts

Stock market drops may give your stomach the same feeling like a rollercoaster. But unlike the big drops at a theme park, big drops in your stock market account are no fun at all. With a long-term focus and smart investing strategy, beginner investors can find big success in the stock market.

If you want to take advantage of the current market lows, now is the time to do so. Find a financial advisor like Fisher Investments or open up a brokerage account at a financial institution like TD Ameritrade Know How To Invest in Share Market For Beginners