Investing in the stock market sounds complicated if you are a beginner at online share market investing. However, you would be surprised to see how easy it is once you know the basic guidelines to invest in the stock market.
For investing in the stock market, you would need to have certain identification documents.
- Aadhar Card
- PAN card: To acquire a PAN card, you need proof of identification, date of birth, and address. You can apply for it on the NSDL site.
- A bank savings account and its statement.
- Proof of residence.
- Your passport size photos.
- A canceled cheque with your name on it from your bank account.
Open Demat Account
You need a online Demat account to hold your shares in an electronic form. Converting your physical shares to electronic format is dematerialization hence the name Demat account. You can choose a depository participant and open up a Demat account with a simple and easy process. Many banks also offer the opening of Demat accounts for their account holders.
Open Trading Account
Now that you have an Demat account, your next step is to open a trading account if you want to buy or sell shares in the stock market. A trading account has a unique trading number that lets you do online share market investing with buying and selling shares.
Once you have opened a trading account, make sure to link with your existing bank account so that the money flow in and out of your account as you buy and sell shares happens seamlessly.
The primary exchanges where you can sell or buy stocks are the National and Bombay stock exchanges. Some stocks will be on both these exchanges, while some may be exclusive to any one of them. So it’s better if you choose a depository participant who allows trading on both.
For opening a Demat account, you would need to pay annual maintenance charges specified by your service provider. However, for a trading account, there are no service charges.
While Demat and trading accounts are necessary for investing in the stock market, opening both is not mandatory. You need to have at least one of the accounts to start investing. A trading account allows you to trade in futures without needing a Demat account, and a Demat account lets you keep shares for an IPO without needing a trading account.
Once you have opened your Demat and trading account, it is time to start your investment. If you are new to the stock market, start slow, and you can invest in either the primary share market or secondary share market.
The primary share market is the initial public offerings of a company, and the trade of the shares happens between the company and the investors. The secondary share market is the buying and selling of stocks directly between investors.
Choose a strategy
Now you need to decide your investment strategy.
In the intraday trading strategy, you invest daily, selling all the shares by the end of the day to benefit from the price fluctuations.
In the value investing strategy, you need to find companies whose shares are undervalued and keep those shares for a long time till they convert into profits.
Keep track of The Market.
Whether you are a long-term or short-term investor, it is better to keep track of what is happening in the market. Track all the variables that can affect the value of your shares and trade accordingly.
Investing in stocks is an easier task for beginners than it seems to be. However, the stock market scenario needs to be understood in detail before investing.