Share market investment has varied implications for varied persons. Each person who enters the market has different expectations from it. While some wish to invest in it for a long-term period, others with to try their luck at positional trades or intraday trading. A lot is decided by the attitude you have towards share markets and how you wishe to take it forward. Returns and outcomes you get is directly connected to your outlook towards the market. However, the fundamental requirement is to understand how to invest in the stock markets. This blog aims to give a step by step guide on how to invest your money in stocks.
Step 1 – Set Trading Objectives
First and foremost, you must know why are you investing? What is the objective? Next comes the question of whether you are capable of investing the money and taking risks. You may have a strong intention to dive into the stock market, but if you do not have the money to make it happen, then nothing would really materialize. Once you have gathered this basic premise, you have to set their goal. You will have a better idea of their expected earnings based on the investment amount and goal.
Step 2 – Study the Stock Market
After setting their trading goals, you must move on to familiarize yourself with the mechanics of the stock market. Learn the fundamentals and the important components that drive stock trading. Before advance to the next step, make sure that you take help of someone who has a firm grasp of the concepts involved in stock valuation, like a registered investment advisor. The better you become at valuing investments, the better becomes your portfolio. Once you have adjusted your objectives according to the risk tolerance, you can carry on to the next step.
Step 3 – Set-up a Brokerage Account
There are some brokerage houses which take commission on each trade, while there are some other ones which take a fixed fee for each trade and they are called discount brokers. However, if you decide to buy securities that do not need a broker like common ETFs and index funds, all that you need to do is set up an online account to manage and fund your investment. Register through the right website and deposit funds so that your account can go live.
But if you want to buy stocks, avail brokerage service that aligns with your specific financial capacity. Brokers offer several services and come in a variety of price ranges. Take note of their package inclusions, commission rates, and other maintenance costs. You can choose between full-service brokers and discount brokers.
Step 3 – Stock Picking
After you are well acquainted with the essentials of stock trading, you may pick a stock to invest in. Picking a stock to invest will mean further research. When traders pay attention to finding the best-valued stocks, they increase their capitals and gain greater chances. Investment research is a trader's way to minimize losses at the right time.
Step 5 – Activate account and Place An Order
This step is the actual buying phase. Now that you have a broker and a demat account, all that you require to do is fund your investment account. Using a trading platform, pick out stocks by entering the company name. Take note which stock exchange offers said stock.
Check the stock price and then enter the number of shares you want to buy. Some people make an error in this step by mistaking stock price with the number of shares. After finalizing the number of shares and checking the total price of the transaction, signal your broker to proceed with the transaction by placing the appropriate order type.
Step 6 – Wait For The Transaction To Push It In Trade
After you place the order, the transaction will be reflected in your portfolio if the order gets executed. Keep updated with related economic news and business reports so you can formulate the follow-up investment decisions. Will you buy more stocks or put sell the previous one? The next move will depend on stock market trends.
Step 7 – Plan Next Purchase
Buying one investment is a start. To buy more securities and to diversify your portfolio is the goal of a prolific trader. Look out for chances to invest in a variety of financial instruments. With this strategy, you can minimize any potential losses in your portfolio.
It is always advisable to take help of a certified investment advisor if you are planning to invest in the stock markets for long or short term.