This blog will cover following topics:-
1. what is stocks?
2. How to start investing
3. Why stock market is not recommended by our families
4. How much time does it take to double your investment amount?
So, firstly we will be starting with the basics
WHAT IS STOCKS
Definition: A stock may be a general term made to describe the ownership certificates of any company. A share, on the opposite hand, refers to the stock of a specific company. Holding a specific company's share causes you to a shareholder.
Description: Stocks are of two types—common and preferred. The difference is while the holder of the previous has voting rights which will be exercised in corporate decisions, the later doesn't. However, preferred shareholders are legally entitled to receive a particular level of dividend payments before any dividends are often issued to other shareholders.
Now in layman's language-
Stocks are simply a document which defines the ownership of a share of company. Many big companies introduces their shares for sale so that the people can purchase them and companies gets the Money to complete their projects.
How to start investing in stocks step by step
Everyone knows that stock exchange investing is one among the foremost popular ways to strike rich by building an outsized corpus over the years. However, what holds back people from investing in stocks is that the myth that – it's too complicated. Beginner investors are frightened of the stock exchange because they assume that it's risky, time-consuming, and sophisticated .
Worry not, this guide will teach you ways to take a position within the stock exchange in India. We offer you step-by-step instructions helping you simplify the method .
1.Get a PAN card, if you do not have one.
The PAN (Permanent Account Number) may be a must for all Indian citizens to hold out any financial transactions like paying the tax , opening a checking account , investing in mutual funds, etc. It’s a 10-digit alphanumeric code assigned to every individual by the Tax Department for assessing the tax liabilities.
Most individuals hold a PAN card. If you do not have a PAN card, then you would like to urge one before you'll start investing within the stock exchange in India.
2.Choose your Stock Broker
Individuals can't buy/sell stocks directly on the national stock exchanges just like the BSE and NSE. Instead, you would like the assistance of intermediaries called brokers.
A stockbroker is an registered person/company who can buy/sell stocks on the markets. SEBI (Securities and Exchanges Board of India) is that the organisation liable for regulating the country's stock exchange . The SEBI allots license to individuals/companies to buy/sell shares on stock markets. Individuals/companies who hold these licenses are referred to as stockbrokers.
You can choose a private stockbroker, whom you'll trust. Or alternatively, you'll select any online broking firm to assist you buy/sell stocks on the market. Some of the favored online broking firms include – Sharekhan, ICICI Direct, IndiaBulls, Kotak Securities, etc.
Note: The names of the web broking firms mentioned above are just examples. It’s not a recommendation. So, confirm to try to to your research and choose the proper broker for you.
3.Set up Demat and Trading Accounts
Once you've got selected a broker – individual, company, or online platform – subsequent step is to line up a Demat and trading account.
Demat account is that the place where you digitally store the stocks/shares in your name. Think of it as your online stock portfolio. Stocks can't be stored during a Demat account within the physical format. It can only hold shares during a dematerialised state. Hence the name Demat.
All the shares that you simply buy from the market are held in your name within the Demat account. Stocks that are sold are going to be faraway from your Demat account. At any time, the Demat account reflects the shares in your portfolio.
Besides the Demat account, you furthermore may require a trading account. While the Demat account is like a web portfolio of your shares, the trading account is what facilitates buying and selling. It acts as an intermediary facilitating buying and selling of stocks.
If you're wondering the way to open a Demat and trading account, don't stress much. Generally, your broker or online broking agency handles it for you.
4.Understanding the Role of the Depository Participant
Besides the Demat and trading account, there's another term that you simply must remember of before you start trading on the stock exchange . This is the depository participant. There are two depositories in the country:
NSDL – National Securities Depository Limited
CDSL – Central Depository Services Limited
Both these depositories offer depository participants to carry their shares. Though the depository participant sounds almost like your Demat account, it isn't an equivalent .
The Demat account shows the amount of shares you hold, the trading account shows the buying/selling that has taken place in your account. The depository participant is where the shares you bought and sold are held.
Most brokers register you for the depository participant, while you open Demat and trading accounts.
5.Register for UIN (Optional)
If you're looking to trade shares worth quite Rs. 1,00,000 at one time, then you would like a UIN (Unique Identification Number). You can ask your broker to urge you the UIN. If you're a beginner, then UIN is not needed. You can register for it later once you plan to go big on your trades.
6.Finally, It’s Time to Trade
Now that you've got found out everything, it is time to start out trading. Before you perform your first trade, you would like to know the fundamentals of how it works.
Let's say you would like to get 10 shares of Britannia Industries Ltd when it reaches a price of Rs. 3400, you need to inform your broker. You set up instructions with your broker. For example, Buy Britannia Industries Ltd, Quantity: 10, Price: 3400. The broker/online broking company will found out an alert. When the share reaches that specific price, the transaction is completed on your behalf.
The shares are purchased supported your instructions and can be reflected in your Demat account. The same applies to selling as well. You set up an instruction with your broker. For example, Sell Britannia Industries Ltd, Quantity: 5, Price: 3600. The sell order is administered if the stock reaches a specific price.
Note that generally, buy and sell orders you found out are valid just for a selected period – say at some point . If the stock doesn't reach your required purchase/selling price during this era , then the order is cancelled, and you've got to put a replacement order again.
In India, buying and selling happen in two stock exchanges:
NSE (National Stock Exchange)
BSE (Bombay Stock Exchange)
Share could also be listed on one or both exchanges. Generally, once you place a sell/buy order, you would like to say your preferred shares exchange because the price varies slightly supported the exchange
Why stock market is not recommended by our families
So in india investment on stock is treated like a gamble by our families although it is not like that . Investment in stocks requires a lot of skills and knowledge. But the problem is some people with no knowledge invests in the wrong shares and then suffer huge losses and after facing such losses they start defaming the market and specially in our country our families trust those people and then create a mindset for the stock market. Although if you think that it is a risky market then you are absolutely right but those who possess knowledge of investment makes huge profits form this market.
How much time does it take to double your investment amount
So the amount of time to double your investment depends on the amount you invest but let me tell you some example-
If you start investing 1000 rs. Per month from now i.e 12000rs. Per annum and increase your investment @15% every year i.e investment in 2nd year is 13800rs. And so on... . So after 30 years -
Total Value: ₹ 25,11,66,815.34 (25.12 Crores)
Total Amount Invested: ₹ 52,16,941.76 (52.17 Lakhs)
Total Earnings: ₹ 24,59,49,873.59 (24.59 Crores)
0 Comments