To buy the right stocks and shares, you need to understand not just your investment priorities, but also your risk tolerance. Note that share market investing is as much a science as it is an art. Rather than relying on trial and error, here is a step-by-step process which you need to follow:
1. Opening accountThe first step is to open a Demat and trading account. Having both these accounts is mandatory. While the Demat account is used to store shares in an electronic format, all the transactions take place with the help of the trading account.
For opening these accounts, you need to submit all the required documents after which an in-person verification will be carried out. Post successful verification, you will be given a user ID through which you can manage your account online.
2. Select your shares/stocksAfter you have successfully created the accounts, the next step is to choose the share or stock you want to invest in. Due diligence is required to make an informed choice.
An ideal way to start is to research the companies you already know of as a consumer. Understand that risk-level varies across different types of shares. You must choose a share based on your risk-appetite and financial objectives. A goal-based approach will help you make the right moves.
3. Finalise how many shares/stocks you want to buyOnce you have chosen the shares and stocks which you want to invest in, decide how many you want to buy. If your research suggests bright prospects for a company over the next 5-10 years, its stock is worth the investment.
While buying, make sure not to purchase stocks of the same kind or whose investment objectives are the same. Also, the number of shares to be bought depends on your budget and long-term investment goals.
To sum up
If you’re new into stock market investing, consulting a professional broker can help you validate your choice of stocks. The broker can answer your questions regarding prevailing market trends and the earning potential from the stock over a period of time.
Since these brokers have been in the field for many years, they have in-depth knowledge and experience about the performing stocks and shares in the market. They are better placed to read the market movements and take calls accordingly.
Click here to open a free demat and trading account.
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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