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INVESTING IN STOCK MARKET: GUIDELINES FOR SAFE INVESTMENT

Author: Shantanu Dutta   |   Date: 07 Jul 2017   |   Comment: 0 Share:   |     |     |  

Who doesn’t want their capital to grow? There are many ways through which people spend their hard-earned money to get the benefit of decent returns from the invested money. Investing in stock market is one of the efficient ways for any individual or institution to boost your savings, but unfortunately very few of us have interest in share market investment despite it being discussed on a regular basis on different channels on TV. And still, people have much confusion about stock market investments. So, here we are going to provide a basic idea about stock markets, which, I think, would be a very helpful tool for the beginners to invest their money in the right place.

Let us clarify some fundamental queries:

What is a stock market?

To explain, in short, the stock market is a registered exchange where public limited companies can enlist their names for share transactions with the public by following stipulated terms and conditions. By investing in the listed companies, the shareholder gets a legal ownership through shareholding and can earn through dividends declared from the profits made by the enterprise, and can also get appreciated (or depreciated) value of shares when transacting.

How can we invest in a share for the first time?

Before investing in stock market, anyone has to clear up certain things, such as -

  • Must possess a PAN Card- It is the Permanent Account Number which is the core requirement for any investment.
  • Should open a D-MAT account and trading account-D-Mat account is to hold the shares and trading account is to buy and sell the shares.
  • Should contact a broker - A well-reputed share broker will handle all the transactions and guide you through the transactions because of his expertise.

Different Ways Of Investments

Other than the above basic requirements, you have to decide how and where you will invest.

Investing in a share is mainly of three types:

  1. Long-term Investment which is based on fundamentals.
  2. Short term or very short-term Investment which is based on charts and historicals.
  3. Speculating Investment which is based on future options calls (It gives the investor the right to buy share in future date) and puts (The right to sell but not obligation to sell the share).

An investor should keep an eye on one thing to maximise his gain because different themes have different motives.

SAFE BUYING OF A STOCK: FEW TIPS.

  • When nobody intends to buy shares in the market, it is wiser to buy shaes of a good company at a lower price and sell it when price goes high.
  • Purchase the industry leader i.e., Hindustan Leaver in FMCG sector.
  • Look for the future industry like solar companies, electric car companies, commerce companies etc.
  • Always restrict the total number of stocks to say 15 and monitor daily.
  • Watch our society trends i.e., today air conditioner is a necessity so that AC companies will perform better in future.
  • Inspect the balance sheet of invested companies.
  • Never follow the crowd.
  • Hold on your shares, don’t rush for profits. In general, the longer you remain invested in shares, the better the returns.
  • Buy as soon as a stock makes new high after a normal reaction.
  • Trade only the active stocks (Daily Traded Stocks).
  • Never buy a stock just because it has fallen from a great high nor sell it because it is high priced.
  • Prepare a chart of the invested companies for the price movement in a bar chart and identify the resistance and breakout/breakdown of a share in the pattern on a daily basis.

Last but not the least, partially take the profit out from the investment and reinvest it in a new theme regularly.

So friends! Go through the above information and begin to think rationally. Investment in the stock market can make a big difference in your capital gain, so make up your mind for a fruitful investment plan in the stock market.

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