4 Min Read
Investing in the stock market may seem intimidating at first, but the right strategies and knowledge about equities could make it simple and bring rewards.
Here’s a beginner-friendly guide to help you start your stock investment journey.
Before putting your money in a high risk asset class like equity shares, it’s important to understand how the stock markets work. A thorough research about the markets and companies could be helpful in managing your investments better while minimising the risk.
Stocks represent ownership in a company and their prices fluctuate based on market conditions, policy decisions, company performance and investor sentiment.
Knowing the difference between primary markets (where IPOs are offered) and secondary markets (where stocks are traded) is a good starting point.
Requirement of two accounts
To participate in the stock market, you need two essential accounts –a Demat account, a repository where your purchased shares are stored in electronic form, and a trading account that facilitates the buying and selling of shares.
These accounts can be opened with registered stockbrokers. Choose a broker that offers a user-friendly platform, reasonable brokerage charges, and reliable support services.
Knowledge about stock analysis
Making informed investment decisions requires a solid understanding of both fundamental and technical analysis. Fundamental analysis involves evaluating a company’s financial health by examining its revenue, profits, market position, and financial statements such as balance sheets and annual reports.
On the other hand, technical analysis focuses on studying stock price patterns and charts to identify trends and predict future price movements. Mastering these skills enables investors to assess the growth potential of stocks and make decisions that align with long-term investment goals.
Research and select stocks
Start by researching companies in industries you understand. Evaluate their growth prospects, past performance and market trends. Use online tools and resources like company reports, stock screeners and market news to narrow down your equity options.
Start small and diversify
When starting out, invest small amounts and spread your investments across various sectors and companies. This diversification minimises risk and reduces the impact of poor performance from any one stock. Experts advise to begin with a small amount that you can afford from your savings and even losing it won’t hurt your financials significantly.
Monitor your portfolio
Regularly monitor your portfolio to ensure your investments align with your financial goals. Keep track of market trends, company updates, and economic news that may impact your investments.
For more insights and to access various investment calculators, visit CNBC TV18 Investment Calculators.
Adopt a long-term perspective
The stock market can be unpredictable in the short term, with price swings influenced by market sentiment. However, over the long term, it has historically provided consistent returns. Patience and discipline are the key factors to building wealth through the stock markets. Short-term investments could be rewarding with quick returns at times, but experts advise to follow a long-term investment strategy to build wealth.
Here’s how trading works
Buying shares: When you purchase shares, money is deducted from your bank account, and the shares are added to your Demat account.
Selling shares: When you sell shares, they are transferred from your Demat account to the market, and the proceeds are credited to your bank account.
Key terms to know
Familiarise yourself with some of these basic stock market terms:
Buy: Purchasing shares.
Sell: Selling shares you own.
IPO (Initial Public Offering): A company’s first public sale of shares.
Portfolio: The collection of investments you hold.
52-week high: When a stock hits its highest price in 52-weeks (or a year).
52-week low: When a stock hits its lowest price in 52-weeks (or a year)
Upper Circuit: The highest price a stock can touch in a single trading session. The upper circuit limit generally varies between 5% and 20% depending on the stock category.
Lower Circuit: The lowest price a stock can touch in a single trading session. The lower circuit limit also varies between 5% and 20% depending on the stock category.
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| Axis Nifty Next 50 Index Fund | +71.83% | Invest Now | Equity: Large Cap | 0.25% |
| Axis Nifty 500 Index Fund | -- | Invest Now | Equity: Flexi Cap | 0.10% |
| Axis Nifty Midcap 50 Index Fund | +46.03% | Invest Now | Equity: Mid Cap | 0.28% |
Here’s a beginner-friendly guide to help you start your stock investment journey.
Before putting your money in a high risk asset class like equity shares, it’s important to understand how the stock markets work. A thorough research about the markets and companies could be helpful in managing your investments better while minimising the risk.
Stocks represent ownership in a company and their prices fluctuate based on market conditions, policy decisions, company performance and investor sentiment.
Knowing the difference between primary markets (where IPOs are offered) and secondary markets (where stocks are traded) is a good starting point.
Requirement of two accounts
To participate in the stock market, you need two essential accounts –a Demat account, a repository where your purchased shares are stored in electronic form, and a trading account that facilitates the buying and selling of shares.
These accounts can be opened with registered stockbrokers. Choose a broker that offers a user-friendly platform, reasonable brokerage charges, and reliable support services.
Knowledge about stock analysis
Making informed investment decisions requires a solid understanding of both fundamental and technical analysis. Fundamental analysis involves evaluating a company’s financial health by examining its revenue, profits, market position, and financial statements such as balance sheets and annual reports.
On the other hand, technical analysis focuses on studying stock price patterns and charts to identify trends and predict future price movements. Mastering these skills enables investors to assess the growth potential of stocks and make decisions that align with long-term investment goals.
Research and select stocks
Start by researching companies in industries you understand. Evaluate their growth prospects, past performance and market trends. Use online tools and resources like company reports, stock screeners and market news to narrow down your equity options.
Start small and diversify
When starting out, invest small amounts and spread your investments across various sectors and companies. This diversification minimises risk and reduces the impact of poor performance from any one stock. Experts advise to begin with a small amount that you can afford from your savings and even losing it won’t hurt your financials significantly.
Monitor your portfolio
Regularly monitor your portfolio to ensure your investments align with your financial goals. Keep track of market trends, company updates, and economic news that may impact your investments.
For more insights and to access various investment calculators, visit CNBC TV18 Investment Calculators.
Adopt a long-term perspective
The stock market can be unpredictable in the short term, with price swings influenced by market sentiment. However, over the long term, it has historically provided consistent returns. Patience and discipline are the key factors to building wealth through the stock markets. Short-term investments could be rewarding with quick returns at times, but experts advise to follow a long-term investment strategy to build wealth.
Here’s how trading works
Buying shares: When you purchase shares, money is deducted from your bank account, and the shares are added to your Demat account.
Selling shares: When you sell shares, they are transferred from your Demat account to the market, and the proceeds are credited to your bank account.
Key terms to know
Familiarise yourself with some of these basic stock market terms:
Buy: Purchasing shares.
Sell: Selling shares you own.
IPO (Initial Public Offering): A company’s first public sale of shares.
Portfolio: The collection of investments you hold.
52-week high: When a stock hits its highest price in 52-weeks (or a year).
52-week low: When a stock hits its lowest price in 52-weeks (or a year)
Upper Circuit: The highest price a stock can touch in a single trading session. The upper circuit limit generally varies between 5% and 20% depending on the stock category.
Lower Circuit: The lowest price a stock can touch in a single trading session. The lower circuit limit also varies between 5% and 20% depending on the stock category.
(Edited by : Anshul)
First Published: Dec 11, 2024 1:19 PM IST
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