There is no set formula for investing in the stock market. But you will definitely benefit if you consider some of the important steps to investing in the stock market given in this article. To know which stocks are worth investing in, it is first necessary to know about those stocks or that company. Getting to know the company means getting information about how the company's business is doing and what kind of changes, political decisions, world events will affect the company's business.
5 important steps
1. Reading
Warren Buffett, Charlie Munger says his main job is to read hundreds of pages every day! Motilal Oswal's president Shri Ramdev Agarwal is also known as a reader of the strip. From this, you can see that you need to increase your knowledge about the stock market.
For this, I used to read the Economic Times newspaper every day. Moneycontrol.com is always checking. Read books every day. Read online news like Business Insider India, Bloomberg, Google, Quartz, BloombergQuint, Google News, Moneycontrol.com.
2. Savings
- The most important thing to invest in is money! Start saving now. If you haven't saved anything yet, start now. Savings is exactly what we are told, savings = income - expenses, but in reality, it should be expenses = income - savings.
This means saving first and then spending! If you start saving every month with this method, you will start saving. Here is a link to a very nice video of Bill Ackman that will help you understand how to start a stock exchange business from scratch and start with a listed company.
(https://www.youtube.com/watch?v=WEDIj9JBTC8) Special article: Why, when, and for what to invest in the stock market?)
3. Benefits of investing in the stock market
There are two main benefits to investing in stocks. Capital Appreciation: If you buy a share for Rs.100, it is worth Rs.1000 after 5 years due to the continuous increase in the company's earnings and business expansion. This means that here we get a 1000% profit.
Dividends: Suppose you buy a bond of Rs. 100 or a debenture, which will give a return of 9% for 10 years, and after 10 years the company bonds Rs. Returns 150. In this your income is 50 (150 - 100) + 90 (9% out of 100 in 10 years) - 60 (average inflation 6% per year) = Rs. Your profit here will be 80%. As you may have noticed, the safe nature of bonds limits profitability of bonds. The same shares, however, have unlimited profits. However, if a company incurs a loss, the bondholders are reimbursed first.
Shares, on the other hand, have unlimited profits as well as unlimited risk. Of course, shareholders are compensated second only to bondholders. The Rs 10,000 investment in Wipro IPO in 1980 will be more than Rs 535 crore today. There is no need to talk about it, these figures tell us everything. Of course, the stock market is not always all that good, sometimes even 99% of the invested shares are lost.
4. Factors Affecting Shares
In the stock market, a company's shares are affected mainly by two factors: investor sentiment (which cannot be quantified in any way), positive or negative news (such as good or bad results of a company, strike of employees, etc.).Bad news can be counted so you can definitely draw conclusions from it in terms of investing.).
How to get started - You always get information about any business and its shares. We read newspapers daily and get regular updates on local as well as global events. You can also understand how a news item can affect your shares.
For this, you have to open a Demat account. The following documents are required for a Demat account - PAN card Aadhar card Six months bank statement Money There are different brokers for opening a Demat account. From them, you can choose any established broker. Fees such as annual maintenance fees, service charges, delivery, and intraday trading fees are charged by the broker. Learn more about it. That way, you can start your investment.
5. Hedging
Always protect your long-term investments via hedging them with other underlying assets like derivatives of the same stock.
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Also, read the following
https://paidforarticles.com/5-tips-for-beginners-to-start-safe-investment-in-the-stock-market-45311
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