Isn’t it nice if your money works and earns for you? Warren Buffet said it is futile if your money lies idle somewhere in your locker. Many such ace investors share the same opinion. They say, “one cannot become rich if he works for money. You become rich when your money brings you more money.” So, investing is probably the wise thing to do with your wealth. Stock market investments can give you returns that no other can. However, to start your stock market journey, you need to get a few things in order. For instance, you need to open trading account for trading.
Here’s a quick guide that shall throw light on the basic essentials. It shall elaborate on all the steps you need to follow.
Develop your knowledge of the stock market
Although stock market investing may seem lucrative, it’s easier said than done. To get the desired results, investors must make appropriate decisions. Wrong trades or bad investments can leave you in losses. So, it is crucial that you first learn about the stock market and how to invest in it. You can start by going through the online resources available easily nowadays. There are numerous online portals that give access to highly informative content. Moreover, the websites of financial institutions also contain plenty of study materials to learn investing. Several experienced professionals and market experts have published excellent books on stock investing. Read them to learn all the stock market basics. Try to improve your understanding of stock market investing.
Many legendary investors have also shared their experiences in their writings. Novices can learn a lot from the life lessons of such successful investors. You can take a cue from their suggestions and implement them in your investing strategy. The essence of investing is to learn as much as possible. There’s no end to knowledge-building with regard to share market investing. So, keep developing your knowledge to become an efficient investor.
Build an investment strategy
We have numerous ways for investing in the stock market. We can follow any investment strategy that suits our financial goals and requirements. Different trading strategies like day trading, scalping, and momentum trading are widely used. Investing strategies can broadly be classified into two categories. The first one is long-term investing. It focuses on creating wealth over a period of time. The other one aims to get quick profits by making short-term trades. Access your financial strength, trading abilities, and how much risk you can afford. Based on that, choose a suitable strategy to invest in stocks.
Open investment accounts
Once you feel you are prepared enough to begin investing, it’s time to get the investment accounts. To trade in the stock market, you will need a demat and trading account. A demat account is a digital repository to store our securities. A trading account, on the other hand, allows you to place your orders. Investors have to use the account to buy or sell securities in the stock market. Financial institutions known as Depository Participants (DP) provide demat and trading accounts. Commonly known as stockbrokers, they facilitate stock market investing.
There are many such firms offering good demat and trading platforms. Choose a reputed broker with good experience in financial services. Also, remember to assess the trading platform before opening your brokerage account. Pick the best stock market app offered by firms like Kotak Securities. With it, you can open your brokerage account online without going anywhere.
Individuals shall get their account credentials once they complete the account opening process. Using that, they can log in to the demat and trading accounts. After accessing the accounts, the next step is to choose stocks to invest in. On the trading platform, you will see a complete list of stocks. You need to pick the best ones that fit into your trading strategy. Stocks are of various types depending on their categorisation. Blue-chip, large or small-cap, sector-specific stocks are some common types. The best approach is to make the right mix. A diversified portfolio will withstand sudden market shocks. This will help minimise losses and also make considerable profits.
Place Your Order
Upon deciding the stocks to buy, start placing your orders. Go to the “buy” option on your trading account. Select the required stocks from the drop-down menu. Then, make the requisite payment via net banking, credit or debit card. Finally, confirm your order. When the stock exchange finds a match, it will process the order. You will get the delivery of the stocks in your demat account in two working days. Find them in the “securities“ section.
This marks your entry into the world of the stock market. Keep investing and continue exploring good opportunities. Remember, the more you trade, the more you learn. Invest regularly and rebalance your portfolio from time to time. Always stay focused on building a solid portfolio. Follow a balanced approach taking into consideration the principles of value investing.