How to invest in Stock Market? [2022]

If you are new in the field of share market and want to know how to invest in stock market?

So you saw how Warren Buffett made a billion dollar wealth only on the basis of investing.

The 1 important point which I want to explain to you with this example is “Wealth Creation”

What is Wealth?

In simple language, investing in some such Assets which can automatically earn you income later on and its value also increases with time, it is called Wealth.

How to invest in stock market?

1. Open 1 dement account

To buy and sell shares of any company in the stock market, you need a trading account and a Demat account is required to store those shares .

To open a demat account, you mainly need 2 things:

  • PAN Card
  • Saving Account

Here I personally recommend you to open your account in Zerodha only.

But why only in Zerodha?

There are many reasons for this:

  • Their charges are very less.
  • This is the best broking firm in India.
  • You can open an account with low fees.
  • Their customer and technology support is also very strong.
  • Also Useful Mobile App and many other features are also available.

You can see them by comparing them in the list of Best Demat Accounts.

2. Start with small capital

Now it comes that how much should be the capital for investment?

For this let me tell you that you can start investing in the stock market even with ₹ 1000 per month.

Even if you have more capital, I would tell you to take small steps and start with small investments

The advantage of this is that due to lack of knowledge in the beginning, your risk increases and there is also the possibility of loss. With less capital, your losses will also be less and you will be able to stay in the market for a long time.

3. Be a Better Investor

Investing

See, in this post it is being talked about how to invest in the stock market? So you have to understand one thing that Investing means creating Wealth which is done by staying with the right stocks for a long time. Long-Term Investing.

This means that you are becoming a shareholder of the company whose shares you are buying and are actually investing your money in the business of that company.

That is why it is important that you do not invest your savings in Intraday Trading or Short Term Trading and see the magic of Compounding in long term investment with good stocks.

Along with this, you have to deepen your understanding, for which you can use these Stock Market Apps .

4. Select 4 good shares

The biggest question of this post is in which stocks to invest money in the stock market?

Now here let me tell you that when you enter the market, no matter how much bookish knowledge you have – unless you start doing it practically yourself and learn from your mistakes, you cannot become an expert.

Here are two strategies I use to peak the stock:

1. Fundamental Analysis

First of all you have to understand the Balance Sheet and Profit & Loss of the company, for this you can use Screener . (Where you can see the fundamental data of the company.)

You have to keep this question in mind:

What has been the sales and profit growth of the company every year?

How much is the P/E i.e. how much is that company Price to Earning compared to other companies.

How much loan does the company have? (If it is Debt Free then it is the best)

Do you understand the business of that company?

Is it the top company in its field? (who is his competition)

What are the PROS and CONS of the company?

How much is that market cap? (A company with a market cap of more than 1000 crores is better)

2. Technical Analysis

Once the company’s data is understood, then we do technical analysis of the company before buying that stock.

For this you can use Tradingview – This is a free website where you can check the chart of every listed company and many other important information.

The easiest way to see this is by candlestick chart.Candlestick Chart Icons – Download Free Vector Icons | Noun Project

Weekly Chart is best for Long Term Investment where one candle is of one week.

Basically we have to see whether the stock is in trend or not i.e. how its price is moving.

You can also use the Dow theory where if the price continues to make higher highs (HH) and higher lows (HL), it means that it is in trend.

5. Risk Management

The price of any share in the stock market is affected by many factors.

So it is not necessary that the stock you picked will go up 100% only.

Because everything has accuracy – now it may be that you have invested in the right stock, but due to miss management or any other thing, the share price of the company falls.

The question is how do you manage that risk in such a situation.

Because I have already told that it is very important to save capital here.

That’s why it is important that you cut your losses at the right time and get out of that stock.

6. Entry Timings

As much as it is necessary to invest in the stock market, it is equally important to enter with the right time.

7. Create a Portfolio

Portfolio means that you do not invest money in any one share and invest it in some 8 to 10 shares, which reduces your risk and increases the chances of profit.

For Example:

– You put ₹ 10,000 in any good companies, now you can see these 2 types of results

– That you put these ₹ 10,000 in 10 types of best companies on the basis of ₹ 1000 per company

So it is possible that out of those 10 companies, only 4 companies gave better results, but those companies will also give 2X to 10X returns in the future – when you stick with them for long term time.

In such a situation, your ₹ 4000 can also make up to 40 lakhs in the next 30 to 40 years.

Note: In such a situation, you can think that if only 10 of those 10 companies are not good then

  • Now this can happen only when blindly put your money in any stock and we do not advise anyone to do so.

8 Create Your Own View

Do not invest your money on the advice of someone else, because there you are giving the key to your luck with someone else.

It is necessary on your own:

  • Do your own research.
  • Understand the basics of stock market.
  • Get new stock ideas and learn from small investments.
  • Learn Investing through Related Books, Articles, Video
  • You can also join any good stock market course.

This will do that you will get confidence in yourself and believe me, a lot of things start getting better from this.

Important Points of Share Trading:

  • Read the POA ( Power of Attorney ) document thoroughly and sign it at specific places . Do not sign everywhere.
  • Before choosing a stockbroker for yourself , do a background check on the stockbroker .
  • Always get contract notes from your broker , as the broker does not provide these notes to you in the first place .
  • Understand all the brokerages and taxes associated with trading with the stockbroker of your choice . Otherwise , you may be cheated later . You can also use the brokerage calculator to understand the types of charges charged by the broker .
  • If your broker is cheating then do not panic and contact the compliance officer of the broker . If that also doesn’t help , file your complaint with SEBI . You can also contact us if your broker is fraudulent .
  • Check the registration number of the broker in various exchanges and their membership ID on the respective websites of those exchanges .
  • Many spam companies have recently started sending SMS in the name of major stockbrokers . New traders are usually deceived by such messages and incur losses .
  • Stockbrokers provide research reports on a regular basis in the trading segment to their clients and then forward to their clients . Before relying on such research reports , analyze them .
  • Monitor the shares that you have bought from the stock market . It is important to know when is the right time to hold , buy or exit and thus , it is important to monitor your portfolio .

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