Want to invest in the stock market but don’t know how to? Can’t stand your friends who are making money on the side while you stand aside and watch them? Don’t worry anymore; we’ll get you started on that.
This article will show the readers how to get started on the stock market and provide a few tips on investing. First and foremost, you guys need to be familiar with a few things before we start talking about investing.
- The first thing you need to know about the stock market is that it is unpredictable, really unpredictable. One can go from rags to riches and easily go back to rags if he/she has not planned their investments. Stock Market is not a plaything; remember that for the rest of your lives.
- There are thousands of shares out there, but you will pick only those shares that meet your requirements, and for that, you will need to analyze those requirements. Your financial requirements, short-term and long-term requirements, your main source of income, and such aspects need to be analyzed carefully. So you need proper knowledge of stock market before investing in the stock market, and you can gain this knowledge by joining a good Stock Market Course.
- Never go with the flow. There will be instances where the majority of the public will be buying the hottest stock in the market, but you will stick to the bundle of stocks that meet your requirements. This is because too many investors buying the same stock results in a dangerous upward spiral. You’d be surprised at how many people lost money due to this.
- You will be patient with your investments. The stock market can be intimidating for newbies, but once you have invested in the select stocks that meet your requirements, hold onto them. The returns may take time, but they will come.
- Observation will do you tons of good. Observe the stock market daily, read the news articles on the stock market, visit online websites that provide daily information on trading. This doesn’t only help in being updated on the stock market but also enables you to identify the shares that need to be changed in your portfolio.
Additionally, observation helps you in making better decisions for your future in investing.
- The power of compounding. Compounding is one of the best friends of any active investor looking for an extra return in the long run. An investor who employs compounding in his/her investment will always get an additional return. Let me explain this with an example.
Mr A invests $100, with a guaranteed return of 10%.
With the simple interest method, Mr A gets $10 every year until he sells it. But, with compounding, his returns will keep on increasing every year.
Year 1 – $10
Year 2 – $11
Year 3 – $12.1, and so on.
Let us get on with the topic then.
- Opening a demat account.
The most basic and easy step. You have to create a dematerialized account to start trading. This account will hold all your securities in their electronic form for you. Some of the famous demat accounts are Zerodha, Motilal Oswal, HDFC securities, and so on.
- Making a portfolio.
The portfolio is your bundle of securities. Like I said before, you need to choose those stocks that will provide you with what YOU require. Make your portfolio based on your requirements (after you analyze them ofc). There are a couple of ways to minimize the risk factor while preparing a portfolio.
Choosing stocks that are from different sectors and even different share markets is the most basic one. Another one is to choose stocks with a negative correlation with each other. This helps in reducing the overall impact of risk on your portfolio.
Create a carefully planned portfolio before investing your money.
- Actually invest your money.
Once you have made your portfolio and it is solid to go, invest your money in it, and don’t for a second expect miracles that you’ll get double the returns in 25 days (of the reference). You will have to be patient with your investments, as I mentioned before.
There are more interesting topics about the stock market and dozens of other methods to make money in it, for which I will advise the readers to take up some great courses on stock markets. The Thought Tree is one such institute that provides a stock market course.
Thank you for reading my article. I appreciate it.
