Investing in stocks is undoubtedly a lucrative prospect; an investment avenue that certainly has the potential to make your money grow and deliver superior inflation-adjusted returns with time. The only pre-requisite is that you should stay invested for long in order to reap maximum dividends. That being said, your financial goals and stomach for risks should be the ideal determinants of the chosen investment avenue.
With a definite financial objective, purchasing shares online can be one of the better ways of reaching this goal. Buying and selling shares online, besides securing you probable profits, can also impart invaluable experience in trading. However, the mainstay of it all is choosing the right shares.
How to buy shares online?
- Get a PAN card
A Permanent Account Number (PAN) is the primary pre-requisite, prior to getting started with your stock market investments and buying shares. A PAN is a 10-digit alphanumeric number that is allotted by the Income Tax Department. In India, you would need a PAN number to open a bank account, invest in mutual funds or buy shares, for that matter.
- Find a good broker online
Transacting over stock exchange without the support of an intermediary is not an option. A broker – mandated to be registered and licensed by the Securities and Exchange Board of India (SEBI) – retains the right to allow you to buy and sell shares over the stock exchange. These brokers can be individuals or other online agencies as well.
While putting your faith in a broker, acquaint yourself with the brokerage fees involved and carry out a thorough background check in order to be doubly sure about the broker’s credentials.
- Make your trading and demat account
Having finalized an online brokerage agency, the next step is to get your demat and trading account – the former designated to hold your shares electronically and the same would be reflected in your portfolio.
It is over a trading account that every subsequent transaction (be it purchase or sale of shares) would happen and you’d be able to keep a tab on these from the statements you would receive periodically.
- Know what a depository participant is
A depository serves as the connect between shareholders and companies that are listed on the stock exchange. The two depositories in India are National
Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL). A depository could be a financial institution, broker or any other entity that is responsible for the eventual transfer of shares.
- Choose the right share and buy
Ask your broker to furnish details of stock reports and analyses – something that can go a long way in helping you choose a winning stock for yourself. Now that you have the trading account ready and finalized the right stock, the next step is to simply press the ‘Buy’ button.
Log into the online trading account, choose the stock, type in the number of shares that you wish to buy and click on ‘Buy’ to initiate purchase. After you’ve purchased the shares, remember to monitor the investments time to time. This way, you would be able to gauge if your shares are headed north and accordingly, take a call on redeeming them or staying invested for longer.
The information contained herein is generic in nature and is meant for educational purposes only. Nothing here is to be construed as an investment or financial or taxation advice nor to be considered as an invitation or solicitation or advertisement for any financial product. Readers are advised to exercise discretion and should seek independent professional advice prior to making any investment decision in relation to any financial product. Aditya Birla Capital Group is not liable for any decision arising out of the use of this information.
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