How to invest in share market?

Step 1: Define your investment goals

It’s important to start with defining your investment goals. Start with end goals in mind. Know what you want.

Do you want to grow you saved money (capital appreciation) to beat inflation and get higher returns? Do you want to build a passive income from your investments through dividends? Are you Investment for a specific objective?  Or do you just want to create wealth and have fun in the market?

 If you just want to have fun and learn, that's fine.  But do you make sure you don't invest too much or that you're not too drawn to the market?  Also, most people start the same way and then define their goals.

 Regardless, if you're starting a goal-based investment, remember that the time frame will be different for different investment goals.  Your goal may be to buy a new house, a new car, money for higher education, child marriage, retirement, etc.  However, if you are investing in retirement, you have a longer period of time than investing in buying your first home.

 When you know your goals, you can decide how much you want and how much time you have to remain invested.

Step 2: Create a plan/strategy

Now that you know your goals, you have to define your strategies.  You may need to determine if you want to use a lump sum (large amount at a time) or SIP (systematic investment plan) approach.  If you are planning a small periodic investment, analyze how much you want to invest monthly.

 There is a common mistake in our society that you need big savings to start.  Suppose there is one lakh or more.  But this is not true.  As a general rule of thumb, first create an emergency fund, and then start allocating a fixed amount, asking to save 10-20% of your monthly income and invest.  You can use the remaining part of your earnings to pay your bills, mortgage etc.  However, even if the allocated amount is 3-5k or more, it is enough to make an investment habit.

 

Step 3: Read some investing books.

There are a number of decent books on stock market investing that you can read to brush up the basics. Few good books that 

I will  highly suggest the beginners should read are:👉👉

will suggest the beginners should read are:

• The Intelligent Investor by Benjamin Graham
• One up on wall Street  by Peter Lynch
• Common Stock and uncommon profits by Philip Fisher
• The Dhsndho Invester  by Mohnis  Pabrai 
• The Little Book that beat the market  by Joel Greenblatt
• Learn to earn   by Peter Lynch 

Step 4: Choose your stock broker

Deciding on an online broker is one of the most important steps you should take.  There are two types of stock brokers in India:

 Full service broker

 Discount brokers

 - Full service agent (traditional agent)

 They are traditional brokers that provide trading, research and advisory services for stocks, commodities and currencies.  These brokers charge a commission for each operation executed by their clients.  They facilitate investment in currencies, mutual funds, IPO, FD, bonds and insurance.

 Some examples of full time brokers are ICICIDirect, Kotak Security, HDFC Sec, Sharekhan, Motilal Oswal, etc.

 - Discount broker (Budget broker)

 Discount brokers offer trading facilities for their clients.  They do not offer consultants and are therefore suitable for the "do it yourself" type of clientele.  They provide low, high speed brokerage and a decent platform for trading in stocks, commodities and currency derivatives.

 Some examples of discount brokers are Zerodha, 5paisa, Upstock, Angle Brocking  etc.

I will highly recommend you to choose discount brokers (like Zerodha) as it will save you a lot of brokerage charges.

Initially, I started trading with ICICI Direct (which is a full service broker), but I soon discovered that it was much more expensive than discount brokers.  There is no point paying extra brokerage fees, even if you earn the same profit.  And that's why I replaced Zeroda as my agent.  (Related posts: Various Stock Trading Fees Explained: Brokerage, STT, And More)

 Zododha (a discount broker) is part of a brokerage of 0.01% or 20 rupees (whichever is less) for an order executed on Intradía, regardless of the number of shares or their prices.  For delivery, Girodha has a zero brokerage fee.  Therefore, while using the Xeroda platform you should pay a maximum of Rs 20 per brokerage and it does not depend on the volume of the trading.

It is much cheaper than direct ICICI (full service broker) which requests 0.55% brokerage on every transaction.  If you buy shares in ICICI Direct for Rs 50,000, you will have to pay a brokerage of Rs 275 for the delivery trade, when you hold the shares in your demat account for more than one  day in your demat account.

Also, since this amount is taken from both sides of the distribution transaction (buy and sell), you have to pay a total of Rs 550 for the entire transaction in direct ICICI (much more expensive than Zeroda).

 In short, if you are planning to open a new trading account, I would recommend opening a discount broker account so that you can save a lot of brokerages

Step 5: Start researching common stocks and invest

Start to notice the companies around you.  If you like the products or services of any company, drill down for more information about its parent company, such as whether it is listed on the stock exchange or not, what is the current stock price, etc.

 Most products or services that you use on a daily basis: from soap, shampoo, cigarettes, banks, fuel pumps, SIM cards or even your underwear, all have a company behind them.  Start researching about them.

 For example, if you have been using HDFC debit / credit card for a long time and are satisfied with the experience, then do more research on HDFC Bank.  Information on all listed companies in India is publicly available.  A simple "Google search" of "HDFC share price" will give you many important information.  (try it now!)

 Similarly, if your neighbor has recently purchased a new Baleno car, they are trying to find out more about the parent company, ie Maruti Suzuki.  What other products does the company offer and how has it been performing recently, such as its sales, profits, etc.

 You do not need to start investing in stocks with hidden gems.  Start with popular large-cap companies.  And once you are comfortable with the market, invest in small and mid caps.

Step 6: Select a platform to track your performance

You can simply use an Excel or Google spreadsheet to track your stock.  Create a spreadsheet with three tables:

 Things you are interested in and you need to study / investigate,

 The actions you have already studied and which are cultured,

 Various actions - for other actions you want to track.

 In this way, you can easily track stock.  Apart from this, there are many financial websites and mobile apps that you can use to track stocks.  However, I consider it easiest to use Google Sheets to track my stock.

Step 7: Have an exit plan

It is always good to have an exit plan.  There are two ways to get out of stock.  Either making profits or making losses.  Let us analyze both scenarios.

 Basically, there are only four scenarios in which you should sell a good stock in your portfolio: 1) when you need a lot of money 2) when the stock's fundamentals have changed 3) when you have a better investment opportunity and 4  ) When you reach out.  Investment objectives

 If your investment objectives are met, you can happily exit the stock.  Or reserve at least a portion of your stock portfolio earnings and switch to other, safer investment options.  On the other hand, if the stock has fallen below your risk appetite level, then exit the stock again.  In summary, always know your exit options before entering.

 That's all.  There were seven stages that will help you know how to invest in the stock market.

Keep  learning keep growing 📖📝

Happy Trading Happy Investing 💓