Everyone wishes to have financial freedom and wants to grow financially.
No one wishes to lose money!
You might’ve heard and read stories about famous billionaires and investors like Rakesh Jhunjhunwala, Vijay Kedia, or Warren Buffet who made their fortune through investing in the stock market.
But have you ever questioned that how have they achieved that?
Do you also wish to invest in the stock market in India? Are you confused about where and how to start investing in the stock market in India?
Then I must say that you’re at the right place!
In this article, we will take you through how does stock investing works and will guide you on how to start investing in the stock market in India.
Let’s proceed by focusing on each step to begin your journey of investing in the stock market in India, which is regulated by SEBI.
What is stock investing?
The stock market means an exchange where company shares, securities, and other financial instruments are bought, sold, and traded.
In other words, you can say that the stock market is a market that deals in the buying and selling of company stocks and shares and government bonds.
The stock market can also be called an equity market, where equity shares and traded, purchased, or sold.
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Let’s take an example:
Karan owns his clothing brand named Clothify and wishes to expand his brand all over the country and globe physically plus on e-commerce platforms but doesn’t have enough funds to do so.
So, Karan decides to take his company public to raise enough funds for his goals and issues 5,00,000 new shares at his initial public offering and raises a good amount.
Why should you invest in the stock market now?
Now that you’ve got a basic idea about how the stock market in India works, you must be wondering that why should you invest in the stock market now? Should you only save for the future?
Aren’t there any better options?
Well, the answer is quite simple, and let’s not complicate it.
Firstly, talking about the difference between saving and investing.
You need to consider that in an economy, one of our enemies is inflation.
If I earn 5000 rupees today and my expenses are 2000 rupees.
After 5 years, my expenses will increase and can become 4000 rupees and to compensate for this, my earnings that are my salary has to increase plus the money I saved in the past won’t be enough for the future.
If I would’ve invested my money, I would’ve earned the returns on my investment and this is how famous businesspeople around the globe multiply their money, by simply investing.
And, talking about the alternatives, there are other investments that you can make like real estate, physical assets like cars, and gold.
But in the case of physical assets, you need to consider depreciation and there are always some problems while investing in real estate and gold, even though you should invest in those as well.
But, if you invest for the long-term, then stock market investments will be more competitive and fruitful and less risky depending upon the stocks, the time, and your patience!
With all this, you must’ve known that why it is really important to invest at least some part of your earnings in the stock market for your future needs.
How to invest in the stock market?
Nowadays, there are many free investment platforms where you can directly make investments and you don’t need to pay the broker’s fee like Zerodha, Paytm, Sharekhan, etc.
The best part is that you need not invest in the stock market directly, you can first start by investing in mutual funds and gradually as soon as you start gaining enough confidence.
A mutual fund is a type of investment in which investors invest their money together and buy a portfolio of stocks or other securities.
Through this, they take advantage of diversification of stocks and a professional fund manager managing their investments.
The fund manager charges a minimal fee or commission to manage your investment from A to Z with professional experience.
Here are a few more points for your better understanding:
1. Make sure you have a Demat/ investment account, if not then open one with the help of a broker or a stock investment platform.
2. Invest either through a broker or a platform, but if you are a beginner, you should always invest under the guidance of a professional investment advisor or a firm if possible.
3. Determine how much you want to invest; do you want to invest a lump sum amount or do you want to invest a small amount regularly.
4. Before your first investment, try investing in a dummy simulator.
5. Enroll in courses, seminars/ webinars, seek professional assistance.
6. Research, read and educate yourself, check out the best books on stock investments: Click here
7. Start investing finally, wait and have patience and see the magic!
Common investment mistakes
We often see that people lose money in the stock market. You can visit the link below to know in-depth about why it happens: Click Here
Following are some of the common mistakes that a beginner or anyone should try to avoid as much as possible:
1. Following a herd mentality and not doing self-analysis and own research.
2. Lumpsum vs Sips: Whether you want to make systematic investments or a lumpsum investment, you should always have a strategic plan for that.
3. Not having clear goals or not setting those.
4. No asset allocation.
5. Having illogical expectations in the short term.
6. Getting greedy or losing patience.
What you should do!
Now that we have discussed the common mistakes that anyone can make when investing in the stock market, let’s now focus on the plethora of solutions that are available for us:
1. Doing independent research and analyzing the investment that you’re making and its impact in the long run.
2. Knowing your goal and planning according to it. For example: if you have a goal of having ‘X’ amount after 5 years, so you should be clear about how much you need to save and invest regularly or as a lumpsum investment for that goal.
3. ‘Don’t put all your eggs in one basket, is a famous English proverb. In context to the stock market, it means that you should avoid investing all your money only in one company or fund, you should always allocate your assets strategically.
4. Having the right goals and proper asset allocation, you should also avoid having any unrealistic expectations.
5. Lastly, have a positive growth mindset and have some patience.
So far, I believe that we have discussed the basics of the stock market in India and you must’ve learned a lot about how to invest in the stock market, what should you do, and what you should avoid while investing.
In the end, if you follow all these steps and start investing, then I believe that you’ll surely become a better investor.
Till then, happy investing!
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