The Indian stock market has been an alluring platform for investors to park their funds in order to make significant returns. It has recorded increasing retail participation due to declining interest rates on traditional fixed income instruments. It has prompted investors to hunt for new investment avenues, and they find the stock investment as a lucrative avenue. One of the primary stock exchanges in India, NSE has become the number#1 derivative exchange globally for the third consecutive year with its services of 20 years for derivative trading.
How to Invest Money in the Stock Market Online
For investing and trading online in the stock market, you need to create trading account along with a demat account with a SEBI-registered broker. These two accounts are required to trade multiple financial assets at the relevant stock exchange. To open your demat and trading account, follow these simple steps:
- Download the broker’s trading app or visit its official website. Access the online application form.
- Enter basic details of the mobile number and upload KYC documents – PAN, Identity proof, address proof and passport size photo.
- Go through in-person verification via a recorded self-declaration video or live.
- Receive your demat and trading account number.
Your demat account, trading account and savings account are connected to each other for online trading. You need to fund your trading account by the registered bank account. Funds are transferred to your trading account from your bank account to buy securities. Now you can invest money and start online trading. These securities you buy or sell are debited and credited from your demat account.
You can invest your funds in the following assets in the stock market:
- Equities: You can invest directly in the stocks of a company after accessing the upside or downside of the business. IPO financing is also a lucrative option to invest in equities.
- Mutual funds: You can invest small amounts in these professionally managed funds. They pool money from many investors to invest in a variety of securities.
- Exchange-Traded Funds (ETFs): It is also a type of fund that tracks an index, sector, or commodity to invest pooled funds.
- Bonds: These are debt securities that can be issued by government, corporations or municipalities. Government bonds are considered safer than others.
Aspects to consider before investing
Have clear mindset
Find out answers to – whether you want to be a trader or investor, your financial goals, your risk-taking capability, and your investment horizon. A trader may require an advanced trading platform while an investor looks for discount brokers to save on investing costs.
Beginners may get confused with myths like you require a huge amount to start investing in the stock market. In reality, you can buy or sell even one share if the company allows. You should have a defined budget before investing or trading. You should not invest without accessing your risk profile. Invest that you can afford to lose as the risk of losing capital is inherent in stock trading.
Focus on the long-term
Investors have different approaches to tap into the market opportunities. The best bet suggested by legends is to stick with fundamentally strong stock for the long term. Research about a company well with strong fundamentals and a high potential for long-term growth. Investors with a long term perspective can reduce the risks and make significant profits.
Diversify your stock portfolio
It is an ultimate rule to follow by every investor. You cannot park all your savings in one stock. Identify the growth rate of different companies and list the best of those to invest in. It is also necessary that you reconsider your investment portfolio periodically. It will ensure that your investments are still synchronised with your set financial objectives.
These are the basics that every individual should consider to investing money. Stick to basic rules to invest in stocks to gain significantly. While setting your demat account and trading account, check the demat charges and brokerage charges. With a discount broker, you can save on investing and trading costs.