A Beginner's Guide to Investing
Once we start earning and making enough money
to take care of our monthly expenses, we start thinking of ways to save some
money and invest some. It is important to invest in equity for your future to
build wealth and fulfill long term goals. Investing (especially long term)
reaps benefits for you while you are busy in your life. A volatile market
scenario, like the one we’re currently experiencing, is also a great
opportunity with a lot of stocks up for sale.
But all said and done, how and where do you start
from?
- Decide the
way you want to invest
There are several options to invest in the market. You have to decide how involved you’d like to be in selecting the stocks you want to invest in. - You’re the
kind of person who is interested in choosing the stock yourself, (and you
have time to do the required research before investing). You need a Demat
account and there are aplenty to choose from
- You don’t
have the time or knowledge to do trading but understand the importance
and value of investments. You need a brokerage firm that can understand
your investment goals and offers investment management at a low-cost.
Some of the best
companies that offer great services for both the type of investors are Zerodha,
Motilal Oswal, Upstox, Sherkhan, ICICI Direct, HDFC Securities, etc
- Set a budget
for your stock investment
- How much
money is needed to start investing
This depends on the kind of stocks you want to buy. If you’re the person who does everything themself then it depends on the kind of stocks you want to buy. If you’re the one taking advice from a brokerage firm, then based on your goals they will advise you the money you will need to invest in your portfolio - How much
money should you invest?
This depends on how much you earn and the amount that you have left after you have made all the expenses and the required savings. Never put all your money in the market, save some for emergencies as well
Here are some quick Do’s and Don’t to invest
in the stock market in India
Do’s
●
Always ensure that the market intermediaries
that you are dealing with are registered with SEBI/ Stock exchange
●
Do your research before investing
●
Start with clear goals in your
mind
●
Be clear about the level of risk
you want to take
●
Invest consistently rather than
putting a large corpus in one stock
Don’ts
●
Never sign or carry forward an
agreement with any intermediary without understanding the terms and conditions
●
Never deal or invest your money
based on rumors or tips that ensure guaranteed returns
●
Never put all your eggs in one
basket. Diversification is important, so spread your investment across sectors
Never ignore trading costs. It’s not just the
brokerage costs, but also Demat account AMC, statutory costs, exchange charges,
etc
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