INVESTING IN EQUITY MARKETS MADE EASY

A. GETTING STARTED 

Investing in Equity Markets can be an efficient way to build wealth over time. Every person begins with basics when starting anything new. Learning how to invest wisely and having patience can yield higher returns.

Requirement for Starting Investments in Equity Market

For investing in Indian stock market, there are certain requirements that are required to be fulfilled  to invest in Indian Equity Market.

1. Savings account
2. Trading account
3. Demat account
4. Internet 

For Opening a demat account , following documents are required;-

1. PAN Card
2. Aadhar Card
3. Cancelled  cheque  OR Bank Statement OR Passbook
4. Passport size photos 

How to invest in equity markets?

1. Define investment goals-

when investing in equity markets always define your investment goals.
investment goals could differ based on time frame, i.e long term goals or short term goals.

A long term goal could be creating a Retirement corpus. Investing in equity for 20 to 30 years would yield a better retirement corpus.For a a larger time frame investments can be made in smaller and mid sized companies which i will discuss in coming articles.

Other investment goals could be buying a new car, children education, marriage, buying new house etc. Defining Investment goals will help us select more riskier or well established stocks.

2. Create a plan
since our goals are decided now we can move on to creating a plan.
We need to find out whether  we want to invest via lump sum or by using Systematic Investment plans(SIP).
If you want to invest via SIP analyze whether the investments will be on monthly or Quarterly basis.

 3. Choosing a stock broker

Selecting a stock broker is a very important step.
There are 2 type of brokers in India-

1. Full Service brokers
2. Discount brokers

Full service brokers -

These brokers provide trading, research and advisory services for stocks, commodities and currency.

they get commission on every trade that client execute.

Discount brokers - 

These brokers just provide trading facility for their clients. They do not provide or offer advisory services.

They offer low brokerage, high speed and decent platform for trading in stocks and commodities.

4. Start Researching Common Stocks and Invest

Start observing the companies around you. if you like a product then dig deeper about the company.

Find out if that company is listed on stock exchange.

Most products and services we use in our day to day life and companies that produce them might be listed.

Examples are -

1. Tooth paste - Colgate-Palmolive stock investment.
2. Groceries - D-Mart Stock investment.
3. Shaving -  Gillette Stock investment.
4. Bank- HDFC Bank, ICICI Bank.
5. Pizza - Jubilant Foodworks stock investment.

5. Select a platform to track our investment

There are various applications that are available in the market to track our investments.

You can create your own watch list and save in few applications.

I prefer to use 

1. Trading View
2. Moneycontrol
3. Investing

6. Have a exit Plan

It is necessary to have an exit plan.

It can either be done by 

1. Booking Profits
2. Cutting losses.

Basically, there are only four scenarios when you should sell a good stock in your portfolio: 

1) When you badly need money 

2) when the stock fundamentals have changed 

3) When you find a better investment opportunity and 

4) When you have reached your investment goals.

If your investment goals are met, then you can exit the stocks happily. 

Or at least, book a portion of the profit from your stock portfolio and shift it to other more safer investment options. On the other hand, if the stock has fallen under your risk appetite level, then again exit the stock. 

In short, always know your exit options before entering.

These are few steps that will help you understand how to start investing in stock markets. 

More details about equity stock basics , stock selection, risk management will be covered in articles to come......!