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How To Invest In Stock Market? - A Beginners Guide

If you are a beginner and you want to know “How To Invest In Stock Market?”, then you are at the right place. This article will help you to start your investment journey.

What is Stock Market?

A stock market is a place where people trade or invest in shares of companies or financial instruments that are listed on a public stock exchange. NSE and BSE are major stock exchanges in India. Investing in the stock market is done through stock brokers.

Why do you need to invest in Stock Market?

There are a lot of reasons to invest in the stock market. Such as beating inflation, generating a second source of income, creating wealth using the power of compounding or retirement planning. For any of the above reasons, the only answer is to invest in stock market.

You will be surprised to know that the value of investment of Rs 10,000 made in Wipro Ltd. 40 years ago is Rs 13,79,84,00,000 (1300 crore+) today (27/05/2021).

Consistent and long-term investment in the stock market has always proved to be beneficial.

How to find a Stock Broker?

Stock brokers are registered members of stock exchanges. People can’t directly trade or invest in stock market. They need a stock broker to buy or sell stocks on behalf of them. People have to open a Demat & Trading account with a stock broker to start investing in the stock market. 

Finding a stock broker is a difficult task. People need to look at a few points before choosing a stock broker.

1 Trustworthiness Of The Broker – Broker’s Reputation

Before selecting a stock broking firm, it is very important to get complete information about it.

Like the experience they have in the stock market, their reputation in the industry, their clients’ reviews about them, the number of clients do they have, the number of  complaints registered in the name of the Stock Broker and how many of them have been solved?

To get all this type of information, check on the NSE and BSE websites. Apart from this, read the stock broker reviews on 3rd party review websites such as infinitebroker.com, chittorgarh.com, tradebrains.in or equityblues.com

2 Brokerage Fees

Brokerage fees can be the key point when selecting a stock broker. As every stock broker takes some amount as brokerage fee from its clients in return for the service given to them, it is highly advisable to choose the lowest brokerage Demat account because if there is a high brokerage, then you will have to pay high brokerage on your every trade and this can affect the returns you get from the stock market. Therefore, before selecting a stock broker, compare its brokerage fees with the rest of the brokers.

3 Type Of The Stock Broker

Discount and Full-Service are 2 such categories in stock brokers of India. Discount brokers only provide online services while full-service brokers provide both online and offline services.

Full-service brokers provide various services like trading, mutual funds, advisory tips, IPO, FD, bonds to their clients. Against this, in some exceptions, discount brokers only provide trading services to their customers. For this reason, the brokerage fees of discount brokers are much lesser than full-service brokers.

4 Trading Platforms

Stock brokers provide trading platforms for their clients to trade online. This platform can be in any form of computer software, mobile app, or browser base. Before selecting a stock broker, It is necessary to take information about their trading platform. Such as real-time data streaming, technical charts, and indicators to analyze stocks, ease of trading, software crash history. For all this type of information, be sure to demo the trading platform from the stock broker.

5 Hidden Charges

After trading, many a times it comes to the attention of the clients that their stock broker has charged them a lot of charges besides brokerage and Govt Taxes, which were not informed before opening their account, which leads to cheating. The brokers impose hidden charges such as minimum brokerage charges, software charges, premium advisory charges, and other charges. Therefore, it is highly advisable to check the list of all the charges before opening the account with any stock broker.

6 Payin and Payout Process

Payin and payout is also a point of similar importance to other points. Because all the transactions in the stock market are based on money, at such a time, the sooner and easier the stock broker has the facility of payin and payout, the better it is.

7 Customer Support 

Many times clients have some queries about their trades or accounts. At such times, they are expected to get answers to their questions with complete information and at the right time. At such a time, the stock broker whose customer service officer promptly solves your queries can be called “The Best Stock Broker”. This customer service can be face to face, by phone, email, or live chat. That is why, it is important that before selecting a stock broker, take all the information about it’s customer service.

After completing research of stockbroker you can open a Demat account with your desire stock broker and start investing in stock market.

How to open a Trading and Demat account?

To invest in the stock market, you must have a Trading and Demat account.

Trading Account – Trading account allows you to buy or sell transactions in the stock market.

Demat Account – Shares purchased through the trading account are held in the Demat account in electronic form.

Trading and Demat accounts are linked to each other.

To open an account in the stock market, you must have the following documents.

  1. Pan Card
  2. Proof Of Address 
  3. Passport Size Photograph
  4. Proof Of Bank Account
  5. Proof Of Income

Stock brokers offer both online and offline methods for account opening.

Online Account Opening

  • Visit broker website
  • Fill personal details
  • Upload documents
  • Validate documents with aadhar e-sign and complete the form

Offline Account Opening

  • Visit broker website or nearest branch and show your interest in account opening
  • Stockbroker executive will assist you to open trading and Demat account

After opening an account you can start investing in stock market

How to start investing in stock market?

After opening the trading and Demat account, start online investing using a trading platform provided by the stockbroker. You can also start investing by calling the Relationship Manager appointed by the broker.

You can use analytics like technical, fundamental, market trends to select stocks while investing money. By doing this type of analysis, you can get maximum returns by reducing the risk on your investment.

Important things to keep in mind while investing in stock market

Keep some things in mind while investing in a stock market, it is very important

  1. There is a risk involved in the stock market, so invest only in a company that you understand.
  2. Do not over-invest in the stock market as it may affect your financial health.
  3. Do not invest all the money in one company, always keep your portfolio diversified.
  4. Update yourself by collecting every news of the company you’ve invested in.
  5. Avoid emotional investing, invest only after you analyze the company.

Final Thoughts

Investing in the stock market is an art. Investments made through study and discipline are always beneficial. Happy Investing.

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