How To Start Investing In Share Market – As long as we put our money to work, the value of our money will go down. A 100 rupee today will be worth less than 100 rupees next year because inflation will rise. In this article, you can learn how to start investing in the stock market for beginners.
To outrun inflation and increase profitability, the stock market can be a great place to achieve your long-term wealth goals.
How To Start Investing In Share Market
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But before investing in the stock market, you should learn how to invest in the stock market, how to buy stocks, and how to choose the right investment.
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Buying stocks or stocks or mutual funds and holding them for a long time, usually more than 3-5 years, is called investing. When we invest in financial instruments such as mutual funds or stocks, our goal is to generate returns in excess of the FD interest rate offered by the bank.
The profits generated must beat inflation. Let’s take an example here. Today with 100 rupees we can buy 1 liter of mustard oil. After 1 year, due to inflation, the price of fuel of the same brand will increase to 105 rs.
So unless we increase our current 100r to more than 105 rupees, we won’t be able to buy a bottle of oil in the future. When we deposit 100rs in bank, we will get 6% interest on FD and the bank will give me 106rs at the end of the year.
When we get 106rs, we can buy 105rs of oil next year, but our savings will be only 106-105 = 1r. So the inflation adjusted yield in Bank FD is only 1rs out of 100rs.
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Suppose you invest 100 rupees in stocks and get 12% back after a year. In this case, the amount of 100 rs will become 112 rs. Assuming the same inflation rate, we will generate 112-106 = 6rs more than we would if we keep it in the bank.
This is called beating inflation and generating good returns. This is the main purpose of investing – to earn more from your investment to create wealth after making financial decisions. One way to generate this return, you need to know how to invest in the stock market through mutual funds, stocks, ETFs, etc.
We can invest in joint ventures in several ways. Some of the more popular ones are mutual funds, ETFs, and directly purchased stocks.
If you are a beginner and want to get good returns on your investment, you can start investing in the best Mutual Funds through the SIP or Lumpsum method.
What Are Stocks?
If you want to generate more returns and can learn the basics of stock trading to identify stocks and companies, you can invest directly in stocks or assets.
But investing in the stock market can be risky for beginners. You need to know how to do stock analysis and share market fundamentals before investing.
One part is like the owners of the business. If you own 0.5% of all shares in the company, you own 0.5% of the company. If the company makes money as the owner of the company, you too will receive a profit and the profit will be distributed as dividends.
In the short term, stock prices are moved by news, events, etc. In the long run, if the company raises money every year and increases profit, it will reward its owners in the form of dividends.
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So the demand for such products will continue to increase and the price of the products will increase for a long time.
You need to understand why the stock price will go up. You can check what reasons will lead to a better future of the company. Usually when companies make good profits, they return profits to investors in the form of dividends.
You should learn how to choose the right products and how to identify companies by doing their analysis. We have all of our online analytics courses and business courses, which can help you learn about joint ventures.
Don’t invest in just one company. You would pick 10-15 companies and then split your money into small amounts to invest in each stock. This is called diversification. This is to avoid downside risk, i.e. the risk that a company fails
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You should open a Demat account with a reputed broker to start your investment. There are many best sellers in India. We recommend Zerodha which is one of the best stocks in India and also offers free investment with no brokerage fees. You can visit the direct link to open Zerodha Demat account online in 10 minutes and get started. Below is the list of documents required to open a Demat account online.
Here are some tips for people who are interested in getting started investing in the stock market.
You have to pay off all your outstanding debts like credit card dues, personal loans, etc. The benefits of these loans outweigh the return on investment.
Investing money in a way that won’t affect your daily life. When you are new to stock trading, investing in debt/loans is not a good idea.
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Cash always serves as an emergency fund and the key to independence. When you have money in hand, you can make big decisions in your life, like moving to a new city or quitting your job. Don’t invest all your money in the stock market because it leads to big losses.
While you can invest at any time, it is generally recommended to hold your investment for more than 5-7 years if you want to get the best results from the stock market.
You can increase your wealth by investing in the stock market. After opening a Demat and trading account, let’s see how to invest in mutual funds by following the steps below
You can follow the 50-30-20 rule of saving money to invest in the stock market. It means that if you earn 100r, you should spend 50r on needs and wants, 30r on wants and desires, and save 20r. Out of these savings of 20rs you can invest some money in the stock market depending on your age.
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If you are young, you can invest up to 40% of your savings in the stock market. If you’re in your 40s, we recommend investing no more than 20% of your total savings in the stock market.
Once the value is determined, it’s time to build a portfolio that includes Bonds, Funds and ETFs. If you are new to the stock market, you can put all your money into mutual funds.
If you want to invest in the best stocks and are on a budget, an Exchange Traded Fund (ETF) would be the best option to invest in. Mutual funds usually have a minimum of Rs 500 or more, but ETFs trade like stocks. , where you can buy them at a shared price. Read more about What is an ETF here.
If you know the products and can choose the products, it is recommended that you create products that contain a combination of mutual funds and stocks.
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Decide whether you are willing to invest in mutual funds or via SIP (Systematic Investment Planning). Be prepared for a small investment, so you need to identify the amount you want to invest each month.
Most people misunderstand what it takes to start investing in the stock market, but that’s not true. You can start with a small amount of money
There are many business books for investing, which will help you learn the basics of business. Here are some books that are
If you see a company’s products or services, you should look them up. You need to know more about its parent company, whether or not it is publicly traded, its current price, etc. Most of the products or services that you use in your daily life like soap, shampoo, cigarette, bank, gas pump, SIM card will have a company behind them.
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You can use a Google Spreadsheet to track your products. Make a list with the three available tables
It’s always good to have a plan. You can post profits or cut losses to exit the stock market. Generally speaking, there are only four situations where you should be selling good products in your portfolio, viz
If you’ve met your investment goals, you can happily exit the stock market. You can collect part of the income from your portfolio and move it to another safe investment option. If the stock has declined, you should exit the stock.
Choosing the right stock for investment should understand how the business operates and the company’s future income will increase or decrease. When we analyze the society of this bad money by analyzing its income and balance sheet, we call it the critical evaluation of society. Let’s read below some factors that help to choose the best products
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