Sunday, May 28, 2023

Beginner's Guide: How To Invest In Stock Market

Beginner's Guide: How To Invest In Stock Market

Amid rising financial literacy and awareness over social media, a new generation of youngsters is looking to grow their money, and a lot more joining the bandwagon


The stock market has not just remained for seasoned investors these days as a lot of youngsters are also trying their hands on the art of trading, thanks to smartphones through which they can easily trade in stocks using an app.

Amid rising financial literacy and awareness over social media, a new generation of youngsters is looking to grow their money or learn the art of investing from the early stages of their careers. 

The number of active Demat accounts in India has more than doubled, from around 4.1 crore in March 2020 to 8.97 crore in March 2022. 

However, everything looks simple initially but it gets tough for new investors to understand the nitty gritties of the stock market and trading as things get serious and real money is involved.

Although people enter the stock market to grow their money, there are always risks involved due to the complex nature of the market. So, it’s imperative to learn and understand how the market functions, or else you will end up losing your money.

What do you need to start trading?

For trading, you will need a trading and a Demat account. A Demat account allows you to store the shares you have purchased, while a trading account will facilitate the actual buying and selling activities. You can open an account in an authorized bank or broker by submitting documents such as PAN, AADHAR, photographs, etc. 

Once verified, the Demat account is opened and you can start investing in the stock market.

What is a trading account?

A trading account is used to buy and sell securities that you wish to trade on the stock market. The Bombay Stock Exchange and the National Stock Exchange are primary exchanges where stocks are listed. However, some stocks may only be available on either one of these two exchanges. 

Linked Bank Account

It is also essential to link your bank account to your trading account for a seamless flow of money in and out of your account for trading. You can find two-in-one accounts that serve as both a Demat account and a trading account. 

How to start investing 

You can invest in the primary share market or the secondary share market as per your choice.

Primary Market

In a primary market, investment is made after a company launches an initial public offering (IPO). It totally depends if the shares are allotted to an investor in this case as that depends on the availability of share. 

An amount gets blocked into your bank account once you apply for a lot during an IPO. Once your shares are allotted, the amount is then debited from your account and you can begin trading them within one week.

Secondary Market

The secondary share market is where stock buying and selling action occurs between investors. You can select the shares of your choice to buy or sell. You can set the price at which you want to buy or sell a particular share.

Are there any risks involved?

It’s important to understand how the market works before you start investing in the stock market. You can refer to features such as educational tools and research some brokers offer through their apps or on their websites. This way, you can minimize risks and make a better choice on which stocks to buy, and when to buy or sell them as timing is the key in markets.