How To Invest In Share Market?

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  • 11 Mar 2023

All you need to start investing in the share market are a trading account, a demat account and money to invest. You can start with as little as ₹500. Below are the key steps on how to invest in shares and share market, once you have the requisite accounts open with a broker.

Step 1: Identify Your Investment Requirement

Before you start with your stock market investment, you should know what your investment goals are. You must also figure out what amount you are willing to invest, and at what pace. You need not invest a large lump sum. In fact, you should avoid doing that at the beginning of your investment journey in the stock market. You should instead plan to invest small amounts on a regular basis. Even if you have a large corpus, it is better to invest it over a longer period so that you don't have to worry about timing the market.

Remember that you should only invest in shares what you are comfortable losing. List all your income, deduct your expenses and debt obligations from it - what remains is your investment surplus. Some of it should go towards your retirement plan, insurance and some towards an emergency fund. The rest is available to invest in stocks and other investment instruments. Don't forget to factor in tax liabilities when planning your investments.

Step 2: Choose Your Investment Strategy

Entering and exiting the market at the right time is key to making an optimal profit in the share market. Track the stocks that you have identified in previous steps in share market live. Remember the old adage: buy low and sell high. You must try to enter the market when the shares of the companies you want to invest in are trading at a discount, and exit when they command a premium. This also means that you should avoid herd mentality and look to buy when the market is dumping a stock and vice versa.

Step 3: Execute The Trade

Almost all stock market trades happen online today. You should execute your trade online as well. Make sure you are familiar with the trading tool your broker has provided and submitted the trade request with the right price and quantity. Your broker would also provide a free tutorial on how to invest in share market online. If you are looking to trade intraday, do not forget to add stop-loss and target price. It is best to decide these levels before you buy shares as your emotions may cloud your judgments when monitoring the share market live.

Step 4: Monitor Your Portfolio

While your investment strategy will also provide you with a target portfolio, it is important to periodic review your portfolio to ensure your initial decisions are still correct. The stock market is a dynamic place, and the realities change quite frequently. It is important to track your portfolio to minimize potential losses and maximize profits. This does not mean that you need to react to every change in price level, but that you must be informed of larger trends in the market.

With these simple steps, you will be able to start your investment journey with confidence. The key to success is maintaining discipline in executing your investment strategy, and a desire to learn something new each day.

Now that you know how to invest money in share market, see you at the markets soon.

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