Every Investor wants to make such an investment that they very high returns as fast as possible without losing their principal amount. This is the reason why many investors want to have a top investment plan where they can make their money double in a few months or years with no risk-taking or minimize risk. if you want to find an investment option then let me tell you that the stock market is one of the best investment options for everybody. Although, the risk is very high but returns over the risk is also very high. Friends, please read this article till the end if you want to learn how to invest in the stock market?
Stock Market: High-risk high gain
However, it is a fact that the products which give you high return are always having high risks. In fact, the risk and return of any products are directly proportional. Higher the risk, higher the return.
So, While selecting any products for investment if you are willing to take a risk then I will tell you how to invest in the stock market. If you invest your money in the stock market then your money will grow at an outpace inflation over time. See, it depends on your age at which you are going to invest in the stock market.
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How to decide where to invest money:
If you are at an age of 20 to 30 you can take a risk of 100 percent of your amount. and if you are at an age of 30 to 50 you can surely take risk of 60 percent of your amount. After 50 years of age, you can withdraw your fund from the stock market and can shift your fund toward bonds and fix deposits.
So, first, decide your time horizon. if you are investing for long terms, like retirement and other but if your duration of investment is for long 10 years then you must invest in the stock market. But I recommend you to invest it through a mutual fund.
But if you want to invest in the short term it means less than five years- you should be a little bit careful in investing in the stock market. You should consider some other short term investment products instead of investing in the stock market.
Investing in Stock needs patience
Stock investing also depends on your feelings and patience. if you can tolerate up and down of stock market then you can invest but if you are prone to panicking at altering times then it would be better to shift some conservative funds and have a lighter allocation to the stock market.
Now after all consideration, if you are ready to invest in the stock market then we can proceed further and tell you where and how to invest in the stock market.
Investing in the Stock market is not easy for everyone. As it is a very high volatile asset class. also, there is no guarantee of return. furthermore, you must have good timing of entry in a good stock and exit should also be more careful because it is also not easy to exit. An only good reason to invest in the stock market is that over a long period of investment equity has delivered a higher return than inflation and return gets adjusted with inflation compared to all other assets of investment.
Equity mutual fund:
All equity mutual fund dominantly invest in equity stocks. As per the current SEBI Rule of Mutual fund regulation, An equity mutual fund scheme must invest its 65% of the total fund to equity asset and equity-related instruments. Every Mutual fund has a fund manager to manage your fund actively or passively. Fund managers are a highly qualified person who has knowledge of stock market trading.
National Pension System:
As we all know the national pension system(NPS) is a long term retirement-focused investment product managed by the Pension fund Regulatory and Development Authority. The minimum annual (April to March) contribution for the NPS account is 1000 to be an active subscriber of NPS. NPS is a mixed investment of equity, fixed deposits, corporate bonds, liquid funds and government funds among others. You can decide where to invest based on your risk appetite.
What things needed to invest in share market
If you want to invest in the share market then you must follow some specific procedure:
You must have a PAN and Aadhar Card:
PAN and Aadhar card is a must for all investors of India. It is mandatory for all those who want to invest their money in the stock market. Before investing you must go through a verification process that is called know your customer. (KYC)
KYC is a needed procedure before opening an account with the market regulator that is the Security exchange board of India (SEBI). Besides this Government has made a rule of submitting a six-month bank statement along with a canceled cheque under the new rules to open a Demat account.
Search for the best broker:
First of all, let me tell you that you can not go directly to the stock market to trade shares. Buying and selling of stocks have to be done by brokers. A broker can be anyone individuals, companies or agencies registered with and authorized by SEBI to trade on the stock exchanges. They will charge a brokerage fee or brokerage for help and support they assist you. Their brokerage charges are different for different companies. Before opening an account in any company please compare the brokerage first.
Get a Demat Account:
Once if you have selected your broker, the next step is to open a Demat and trading account. Demat account will hold the stock that you will purchase through a broker and it will reflect in your account. Your share can not be held in physical form. It can be kept as a dematerialized form in your Demat account.
Buying and selling of shares:
Once you have set up your Demat account and all other formalities to buy and sell shares and stocks, we need to inform our broker about the number of shares to be bought or sold along with the price at which you want to buy that particular share. Below are the ways to invest in the share market:
- Need to take decision according to your investment requirement.
- Decide your goal and plan the strategy to invest wisely. Find out the stocks that are fulfilling your investment objectives.
- Always be careful about entry and exit timing. You must enter the market at the best timing.
- Try to buy shares at its minimum price that is available when the market is weak and sell when it rallies. Then you will get higher returns.
- Any requirement should be communicated to your broker while trading in the market.
- Always monitor your portfolio at a minimum time interval. A review of your stock is a must.
- Don’t keep all the eggs in one basket. Always have mixed possible stocks. Don’t try to take unnecessary risks.