The stock market is one of the most popular investment avenues in India. Investors invest their savings into the stock market with the objective of wealth creation. It has the potential to give unimaginable returns. No other investment option can give returns like that of share market.
As per Warren Buffet, “Investing is the process of laying out money now to receive more money in the future.” This means that you must always make sure that the savings or idle money is working and generating returns for you.
Unlike other investment options, investing in the share market is based on the research and hope that the companies will perform well and your money would grow. Therefore, to assist you, we will list down a few things regarding how to invest in the stock market.
How To Invest In The Stock Market?
- When you register yourself with the broker, make sure you collect the photocopies of all the documents before executing any transaction with the broker. Make sure that the formalities are complete from both the end and your registration as a client is fully completed.
- Make sure that the instructions given by you to the broker / agent / depository participant are clear and unambiguous.
- You must always ask for contract notes from the broker. The contract notes act as proof that the transaction got executed. However, if you have doubt regarding the authenticity of the transaction, you can verify it on the BSE website.
- You must ensure that the market intermediaries through which you are making the investment are registered with the Securities and Exchange Board of India (SEBI).
- Always settle your dues with broker/agent/depository participants through banking channels.
- Before you place an order or transact with your broker / agent / depository participant, check their credentials. Check whether they have made necessary disclosures under various regulations. Also, ensure that the company of your broker / agent / depository participant is fundamentally sound and management is trustworthy. The best way to find the correct information in this regard is by visiting the website of the stock exchange, reading from the business magazines, company’s website, data vendor’s database, etc.
- You must adopt an investment strategy that manages your risks well. You must know your risk-taking ability and accordingly decide which investment strategy suits you the best.
- Always carry out due diligence of the intermediary before you become its client. Make sure to read the Risk Disclosure Document and understand its content carefully.
- Application forms, contract notes, acknowledgment slips, etc. are important investment related documents. You must always keep a copy of them.
- When you send documents to companies, trading member, registrar, transfer agent, etc., you must make sure to keep a Xerox copy of them.
- Always send posts through a reliable mode like a registered post, so that they are delivered timely.
The above mentioned are a few things that will help you in investing in the share market. Another important aspect that you must be knowing is that a demat account is a primary requirement to transact in the Indian financial market. Here we list down essentials required to open a demat account in India.
- Bank Account
- Broker or Depository Participant
- PAN Card
- Aadhaar Card
- Statement of Bank or Passbook
- Personalised Cheque
After opening a demat account, it is important for you to know a few things before investing money in stocks.
Things to Keep in Mind While Investing
- You must have precise investment goals.
- Your goals and period of investment should determine the type of stocks for investment.
- Invest regularly from a young age.
- Diversify your portfolio on the basis of your risk-taking ability.
- Do in-depth research of the company you want to invest in.
- Avoid the noise and rumours in the market.
- Never be greedy. Keep patience with your investments.
- Always seek an expert view before investing your money.
The above mentioned are a few points to keep in mind before investing money in the stock market. Having a well-defined financial goal in the market will always help you in managing your capital in a better way. Along with that, knowing the risk you are willing to take in the stock market will help you in building healthy and diversified portfolio for long term.
If you are a beginner in the stock market, you can take the assistance of Kotak Securities. They are the number one broking firm in India. They will help you in making the investment in the share market after understanding your financial goals. They have 25 years of experience in serving the retail and institutional investors. Their team of experts is always available to assist you at all the levels of investment. The team carries out research of stocks and suggests you scripts that have potential to generate higher returns for you.