How to invest in the Stock Market
With the upsurge in the Stock Market in
recent times and promising growth prospects of the Indian Economy in
times to come, new as well as seasoned investors are finding Stock
Market as the best option to invest their money.
Investing in stock Market can be risky
sometimes for new investors because of the constant fluctuations in the
market, but can be extremely rewarding if an investor is focused, and
Mostly Investing in Stock Market is
considered risky because it is subjected to market fluctuations, but if
invested prudently and wisely, equities are relatively best options to
invest because of the high returns it offers to the investor.
If you are a new investor and trying to
understand how to invest in the stock market, this exhaustive guide will
take you through the complete process. To trade in the stock market you
will need to open a Trading and a Demat account with a Stock Broker.
A trading account is used to place buy
or sell orders in the stock market and manage your funds. Demat account
is like a bank account to hold the certificates of your financial
instruments like shares, bonds, government securities, mutual funds and
exchange traded funds (ETFs).
You may wish to choose a traditional
Stock Broker who may charge you a heavier brokerage but will provide you
with a relationship Manager or you may choose an Online Discount Broker
like Moneypalm who will charge you very little brokerage but will give
you an online trading facility and access to its customer support
instead of a relationship manager.
The Documents needed to open the trading account are same for all kinds of brokers. The mandatory documents are:
PAN CARD: This
is the most important document, without which you will not be able to
open a Demat or Trading Account. You will need to submit self-attested
clear Photostat of the Pan Card.
Photos : You will need two latest passport sized photographs of yours.
Address Proof: Address Proof can be :
- Voter I’d
- Passport (Make sure that it is not expired)
- Driving License (Make sure that it is not expired)
- Adhaar Card
- Ration Card
- Utility Bill (Like electricity Bill, Water Bill, Piped Gas Bill, Landline Bill) (Make sure it is not more than two months old.
- Rent Agreement (Make Sure it is latest and not expired.
- Latest Bank Statement (Original Bank statement and should be accompanied with the cheque of the same account)
You can submit self-attested clear Photostat of any of the above.
Cancelled personalized (carries your
name) cheque (if the cheque is non personalized then should be
accompanied with latest 3 months bank statement). This is needed to link
your bank account to the trading account to be opened with the broker.
Income Proof: Like
Latest Salary slip or 6 month bank statement or Latest Form 16 or ITR.
This is not needed if you only want to trade in cash segment. But is
needed if you also with to trade in derivatives.
Please ensure that all the
documents carry exactly the same name without any discrepancies to avoid
filing any sort of declarations that are needed in case of name
discrepancies. Also you need to show the original documents also to the
representative sent by the broker or in case of online verification over
the web camera.
You will also need to sign the
Demat and Trading account kit to open the accounts. Make sure to read
all the terms and conditions and list of charges and don’t just blindly
sing any documents.
Before you start trading in the
stock market, do remember there are few Dos and Don’ts to trading. Do
read these to trade smartly in the future :
Invest only in good stocks:
Select few good blue-chip stocks after checking the company performance
in past, present and its strategies for the future. Stick to those
stocks and give your portfolio time to fetch laurels for you.
Use only your surplus income to invest: Always
remember, investments are always subject to market risks. Invest only
the surplus funds in the market. Always keep yourself liquid for unknown
contingencies. This will always help you, as you will not have to sell
your stocks at a loss in times of need.
Never Ever Borrow to Invest: Instead
invest intelligently with whatever you have, so you are not burdened.
Borrowed sum will always bring in a lot of stress. Why stress yourself?
Play it slow, play it safe.
Avoid following what your peers do:
It is a typical tendency of newbies to buy what people in your circle
are buying. This is a wrong strategy. Be open and be aware of what
people around you are buying, but use your intelligence to understand
the pros and cons of investment. Have faith it your research, instead on
someone else’s research.
DON’T follow Tips blindly, even from an expert:
You may use the tips as an aid for your own research, don’t blindly
follow tips. Also, tips might be biased at times and you may fall prey
Don’t let your fear or greed influence your decisions: Stocks
can rise or fall unexpectedly in the dynamic market conditions. Always
set your targets and your expectations from your investment.
Don’t ever panic in the market. Remember
if you have invested in good stocks, they will most likely not betray
you. So don’t be influenced by crashes in the stock market.
Also even if your stock is performing
exceptionally well, always remember the target you have set. Don’t try
to be greedy. Book profit when you have achieved your target. If not,
chances are the stock may come down after market settles and you will
have to wait longer to achieve you target.
GREED and FEAR in the stock market are your biggest enemies.
But Most important thing is research, study, and have faith in your own
research. There is no better thing than your own hard work and
knowledge that you put in. There are no shortcuts.
Follow the above steps we are sure that
not only you will learn how to invest in the stock market but will also
do well in the stock market. To know more you can visit our website www.moneypalm.in or call us at +91 0124-4342000.