How to invest in share market? A Step-by-Step Approach
The share market is a place where shares or stocks of companies are bought and sold. A share is a unit of ownership in a company that entitles the shareholder to a proportion of the company’s profits and assets. Investing in the share market can earn income from dividends or capital appreciation, or both.
However, investing in share market also involves risks and challenges. The price of shares can fluctuate depending on various factors such as demand and supply, company performance, economic conditions, political events and market sentiments.
Therefore, investing in the share market requires careful research, planning and strategy. Here are some steps to follow if you want to invest in share market:
- Learn the basics: Before investing in share market, you should learn some basic concepts and related terms. For example: What is a share? What is a stock exchange? What is an index? What is a broker? What is a demat account? What is a trading account? What are dividends? What are capital gains? What are the different types of shares? What are the different types of orders? What are the different types of analysis? etc.
- Choose your goal: You should clearly know why you want to invest in the share market and what you expect from it. For example: Do you want to invest long-term or short-term? Do you want to earn regular income or grow your wealth? Do you want to diversify your portfolio or focus on a specific sector? etc. Your goal will help you decide how much money you want to invest, how long you want to stay invested and how much risk you are willing to take.
- Choose your broker: You need a broker to buy and sell shares in the share market. A broker is an intermediary who acts on your behalf and charges a commission or fee for their service. Depending on your convenience and preference, you can choose between online or offline. You should compare different brokers based on their reputation, reliability, charges, services and features before choosing one.
- Open your accounts: You need two accounts to invest in the share market: a demat account and a trading account. A demat account is where your shares are stored electronically in a secure manner. A trading account is where you execute your buy and sell orders through your broker. Depending on your choice, you can open both versions with the same broker or with different ones.
- Choose your shares: You must select which shares you want to buy based on your goal, budget and risk appetite. You can use different methods of analysis, such as fundamental analysis or technical analysis to evaluate the potential and performance of different companies and sectors. You can also use various sources of information such as company reports, news, websites, blogs, magazines, books, etc to gather data and insights about the share market.
- Place your orders: You need to place your buy or sell orders through your trading account using your broker’s platform or app. Depending on your strategy and situation, you can place different types of orders such as market order, limit order, stop loss order, etc. You should also monitor your orders and transactions regularly and keep track of your profits and losses.
- Review your portfolio: You need to review your portfolio periodically and make necessary changes according to your goal and market conditions. You should also keep yourself updated with the latest trends and developments in the share market and the economy. You should also learn from your mistakes and successes and improve your skills and knowledge.