In this pandemic being in the lockdown instead of wasting time in binge watching you can learn some good skill. Being in a middle class family we don’t have financial intelligence or maybe from the childhood you have been told – only way to earn money is working for straight 8 hour and be grateful for that. The guy you are working for will make 8 time to 10 times money then he pays you. In this blog I will tell you How To Invest In Stock Market . This will help you to become more financially independent rather than just having a single source of income.
How To Invest In Stock Market For Beginners
For beginners first I will start with Stock Exchanges in India. There are two types stock exchanges In India –
- National Stock Exchange
- Bombay Stock Exchange
I will not got deep in the history of them because I don’t want to waste your time in that. You just need to know Bombay Stock Exchange is way older than National Stock Exchange and both are governed by Securities and Exchange Board of India known as Sebi. You can think of it as RBI – like RBI is the parent of all banks same thing applies for Sebi too.
There are many different indexes in both exchanges and the most followed is Nifty 50. The best 50 companies listed on the National Stock Exchange and Sensex 30. The best 30 companies listed on Bombay Stock Exchange. There are many other like BankNifty – comprising of best 12 bank listed on the stock exchange like we have Nifty Pharma , Nifty Auto and etc. You can check out the list here in Indices section.
If there is buying in the 50 companies of Nifty 50 the index will move up and if there is selling then the index may move down. There is section of nse top gainers , nse top loser which we will talk about later.
There are many well Known companies listed on the stock exchanges like – nse Infy, nse tcs, nse hdfcbank, nse tata steel , nse idea and many more. These are the companies whose products are being used by us in day to day life basis.
Next Question – How To Invest In Stock Market without broker?
Now I have come across this question many times? Just ask yourself can you deposit your money in the bank without having bank ? No right. So to buy shares and keep them safe somewhere we need broker. That Somewhere is known Demat account. Just like your bank account you keep your shares in the demat account.
When you keep your money into bank – bank charges some fees for the services provided. The same thing is with stock broker also. Different Stock broker charges different fees. There are two types of Stock broker in India.
Full service Brokers – They charge around 0.1 % to 0.2 % of the turnover you made. Let me give a example
- Suppose you buy 1000 shares of the company at Rs 25 so you paid around Rs 25000 right!
- You sell the shares at Rs 26 so you you earned Rs 26000.
- This 26000 – 25000 is your profit = Rs 1000
- The Brokers will not take 0.1 of the profit but they will take 25000+26000 =51000.
- The whole turnover of the trade to be precise.
- They will take 0.1 percent of this money ignoring the fact you made money or not.
- But they give portfolio management also as service.
- usually bank brokerage are full service Brokers.
- Annual maintenance fee is very high
To counter this Discount Brokers came into Existence.
- They take Rs 20 per flat trade and delivery of the shares are free.
- This Rs 20 usually is for F & O trade not for the cash segment.
- Suppose if you buy nse infy shares in cash segment so you won’t be charged for that unless you sell it the same day you purchased [ Known as Intraday trading].
- They don’t give portfolio management and annual maintenance fee is very low.
- Example are Zerodha , Angel Broking , Upstox etc.
Is It Safe To Invest In Stock market
The Real question arises when you think about investing in stock market is Is It Safe To Invest In Stock market?
Well let me be honest with you. Yes there is a certain risk now I will tell you why most of the people lose money in Stock Market. People think they can get rich quickly in the stock market. They will just invest 10,000 rupees in some company and boom they will make lakhs out of it. Why don’t you think about this logic while keeping your in Banks or maybe in gold? Its not your problem.
I will tell you what the problem. This type of thinking is because of what we have been shown by the movie or news channel etc . Movies like Limitless , Wolf Of Wall Street etc have corrupted the minds of people like us. You just think on this way – How you can make money without having any experience of it? People come in the stock market without any knowledge and end up investing into a wrong company.
You need to do research on the company, read the news. Without taking any pain people want to become rich. You like the result but you don’t like the process to get those results.
Long term investment in stocks
You need patience and consistency in the market! take the example of nse infy.
See the return over the time horizon – The secret to success of a company is its managment. Think it as a analogy of car
- Car is the company and management is its driver.
- Even if the car is not running well but if we have efficient and skilled driver (management) then they will make out of it in no time.
- The same thing is with good car – if the management is bad somehow they will end up in accident(bankruptcy)
Management is the key to the success of a company because Companies like nse infy , nse tatasteel, nse itc , nse hdfcbank etc all have one thing in common that is good management.
I Don’t Have Time !
See this is most annoying thing I hear from anyone. We get the same 24 hour right! Instead of going on Dates and spending money on your girlfriend / boyfriend or maybe partying with your friends you can study something useful. I am not saying you should stop all this , I am just saying you can reduce a bit for your on good and betterment.
If you are still busy you can search on google which mutual fund are best and invest. Only the catch here you won’t be investing – rather some good fund manager will invest your money on behalf. This is also a safe way to enter into the stock market as they are regulated by SEBI and mutual funds transaction are monitored by goverment of India.
You can check this video out and play it here! This video tells you more about stock market in detail in a small span of time and this guy is Fab! Literally Fab!
So I hope you got a scenario how actually things work in Stock market. In the next blog I will be talking about – how much money to invest in stock market , tips on how to invest in stock market , When to invest in stock market .
Tell me below in the comment what are the other topics you want me to cover.