Are you thinking to invest in the stock market? but before that want to know how to invest in stocks? Then this detailed post is for you, where one can know some basics of stock investing.
‘How to invest in stocks?’ In this post, basics of investing is written. Also step by step procedure of stock investing is explained in brief.
Investing in stocks: Basics
When you invest in any stock, you bought a share of that company. This share is known as the stock of that company.
Investing in stocks is done for getting return. In the long term, with capital appreciation, passive income by dividend is also possible if investor invested in good quality stocks.
Now whenever a company reported any growth or profit, the value of your share also increases. People tend to buy shares of such a profitable company and they may offer a high price for your share if you want to sell those. In this buying and selling process, investors can earn profit by buying at lower prices and selling at higher prices.
To buy shares of any company, an investor has to open a Demat and trading account with any stockbroker. Demat (Dematerialization) account is needed for holding financial securities (here share) in electronic form. A trading account is needed to facilitate buying or selling shares.
How to invest in stocks: Step by step procedure
- Determine the tenure for investing in stocks
- Keep certain fixed amount for investing in stocks
- Open an investment account
- Make your investing strategy
- Review your investment and make change accordingly
1. Determine the tenure for investing in stocks
This is very important step before actual investing in stock market. When you know the investment horizon then you will not affected by rapid movements during falling market. Quality stocks will pay attractive returns to investors after the long term when hold with patience.
2. Keep certain fixed amount for investing in stocks
An investor should decide a fixed amount of money at particular time or may fix the regular amount of money each month for stock investing. By doing so he will allocate investment amount in parts. In any sudden market fall, an investor can use extra money which is kept in liquid to buy good shares at lower price.
3. Open an investment account
For buying stocks and keeping in electronic form, an investor need to open trading account and demat account. Investor can compare various stock brokers service for the charges they charged for account opening and maintaining.
4. Make your investing strategy
Whether you are conservative investor or aggressive investor, identifying your investing style is useful in investing. One can divide his investment capital in some parts and allocate it in large cap, mid cap and small cap stocks.
Keeping some money in fixed or cash is also one good strategy to buy more shares in sharp market fall. Fundamental and technical analysis of stocks is also useful for selecting any stock for investing.
5. Review your investment and make change accordingly
Now you have invested money in some stocks. With the changing time you should review stock performance, company revenue and profits, Business expansion activities etc to know the near future of that stock. You can also create watchlist for some selected stocks.
By following such steps, an investor can reap good profit in different market conditions.
Frequently asked questions on how to invest in stocks?
Can I start investing in stock market with less money?
Yes. It is possible to invest in stock market with small money. It is good start when you set aside some small amount of money for stock investing. By doing so, you will get initial experience in stock investing and market volatility.
What are best future stocks to buy?
Observe the company whose products/business looks promising with coming years. Any business that has potential to earn money by selling their service/products is worth to buy..
Is stock investing is good for beginners?
Beginner investors may start with less amount of money and should get investing knowledge by reading books. Investing in large cap stocks is relatively safe for beginners. However changing market conditions can result in negative returns in short term..
How to learn stock markets?
By reading investment books and practical investing experience, readers can get some insight of stock investing.
You may like to read: Investing for beginners: A simplified guide