How To Invest In Stocks For Beginners
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A stock is a share of a public company that any investor can own for a price. Sounds interesting, right? Investing in the stock market can be a great way to build wealth over time.
But the stock market is a world of its own with rules, regulations, and principles that can be difficult to understand for beginners.
If you are new to investing in stocks and want more information on how to get started, this blog is for you. We'll give you a crash course on everything that you need to know to invest in the stock as a beginner.
Before investing in stocks, there are certain valuable principles that you should know.
What Should A Beginner Remember Before Investing In Stocks?
1. Investment Goals
You can benefit from maintaining a log of your short term, medium-term and long term investment goals. It can then become more convenient for you to choose stock options that can help you generate capital appreciation to achieve these goals.
2. Start Small
While it can be a tempting proposition to invest a large amount right at the beginning of your investment journey, investing a small, affordable portion of your savings can help you recognize how various aspects of the market affect your investments.
3. Learn The Basics
You can’t play the game if you don’t know the rules. This fact is particularly true when it comes to investing in the stock market. So learning the terminology and fundamentals can build a solid foundation for you to invest with confidence.
4. Set Long-Term Goals
Think long-term while investing in the stock market. The historical data is a clear indicator of how investing over elapsed time spans can grow your wealth.
5. Research And Analyse Stocks
Buying stocks should be based on diligent research and organized planning. Keep an eye on the historical data, the big players, the company’s management, innovation, etc.
How To Invest In The Stock Market?
There are two ways to invest in the stock market:
1. Through A Stockbroker
If you want to invest in Indian stocks directly, it is necessary to select a stockbroker. Once a stockbroker is selected, you will have to open a trading account and Demat account.
Before you can open either account, you need to complete a lengthy KYC process with the registered stockbroker. You’ll need to provide address proof, identity proof, PAN card, a cancelled cheque, and photographs.
You can buy and sell stocks using the Trading account. The Demat account holds the stocks for you electronically instead of physical stock certificates.
2. With Advice From Experts
Apps like Cube give you access to stock advice from experts like Purnartha who have a track record of beating Nifty over the past decade. You can choose to act on the recommendations given by Purnartha which means you'll be in control at all times.
Important Stock Market Tips For Beginners
- Timing the market should be avoided
- There is no right time to start buying stocks
- Diversify your stock investments to balance risk
- Patience and long term thinking is key
- Have realistic goals and expectations
- Leave emotion outside the door
- Don’t follow trends or whims
- Don’t chase get rich quick schemes
- Always consult an experienced wealth coach
Stock Market Jargon For Beginners
- Dividends: An amount paid by a company from its earnings to its shareholders in return for their investment.
- Portfolio: The complete set of investments held by an individual.
- Small-cap stocks: Stocks of any public company hosted on NIFTY SMALLCAP 100.
- Mid-cap: Stocks of any public company hosted on NIFTY Midcap 150.
- Large-cap: Stocks of any public company hosted on NIFTY 50.
- Blue Chip stocks: Stocks of public companies that are iconic industry leaders.
- BSE: Bombay Stock Exchange.
- NSE: National Stock Exchange.
- Bull Market: When stock prices increase consistently.
- Bear Market: When stock prices fall consistently.
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