How To Invest In Share Market: Investing in the share market is not an easy job, especially for the ones who are new to this industry. It is a very tricky process, but nowadays it is becoming quite easy because of various digital platforms. If you are new to this field and are planning to invest in the share market, then you must be aware of its two types that are primary and secondary share markets. The primary market is the type of share market where securities are created. On the other hand, the secondary market refers to the market in which they are traded among investors. There are a lot of things that you must know before joining this new unfamiliar world. Therefore, we are here to help you out to start your journey in the stock market, so read the following information carefully.
Why Do Companies Issue Shares?
In order to function properly in long run, the companies need capital. Due to this reason, the companies raise funds from time to time. There are a few different methods through which a company can raise money such as asking the existing investors to provide more funds. Also, they can apply for loans but it increases interest payment, and companies mostly try to avoid liabilities. Therefore, they launch the shares of their company in the share market. On the other hand, investors also intend to buy these shares in order to invest in the growth and development of the company, which will directly help them to increase their profit afterward. That is why almost every company issues their shares so that they can function properly along with earning profit and sharing it among the shareholders.
How To Invest In Share Market: Documents Required
In order to start investing in the share market, you need to provide the following documents beforehand which are as follows:
- PAN Card
- Aadhaar Card
- Your active bank account details such as your name, account number, signature, and IFSC Code on a canceled cheque.
- Documents showcasing the proof of your steady income.
- Proof of address through valid documents which have been accepted by your bank, broker, etc.
- Your recent passport-sized photographs.
How to Invest in the Primary Share Market?
If you are looking for making investments in the primary share market, then it has to be done through an Initial Public Offering (IPO). As soon as a company gets all the applications from the investors for an IPO, then those applications are totaled and on the basis of demand and availability, the shares are allotted.
If you are planning to invest in both primary and secondary markets, then you must have a Demat account that is going to help you to hold the electronic copies of your shares. In addition to that, another important thing is to have a trading account that is going to help you in buying as well as selling your shares online.
In some of the cases, a trader can also possibly directly apply from their bank account. The IPO application through net banking has been made easier through a process known as Application Supported by Blocked Amount (ASBA).
According to the ASBA procedure, if anybody apply for the shares worth Rs 1 lakh, then the funds are going to be blocked into their bank account and will not be sent to the company. As soon as you are going to get your part of the shares, the exact amount is then going to be deducted along with the balance being released. So, all the applications that are forwarded to IPOs are obligatory to follow this procedure correctly. After the shares are allocated to the traders, those are then going to be listed on the stock exchange. Soon within a week, you can begin trading them as well.
How to Invest in the Secondary Share Market?
Investing or trading in the Secondary share market investing mainly refers to the consistent purchase as well as the sale of shares or stocks. Here is a simple guideline to follow before you start to invest in the secondary share market:
- Step 1: First, you need to open a Demat and trading account which should be linked to your already existing bank account. This will help in performing a seamless transaction.
- Step 2: Now, log into your trading account for the selection of shares you want to trade or invest in. You need to choose the shares that you want to sell or buy. Before that, you must make sure that your account has the requisite amount of funds for buying those shares you want.
- Step 3: Now you need to select the price of the share at which you wish to buy or sell it. After deciding the price, you have to wait for the response or reply to your request.
- Step 4: Once the buyer or seller responds to your request, complete the transaction. You will then get shares or money for the stocks that you have bought or sold respectively.
At last, before getting into the stock market you must be sure about your awareness of the time duration for which you want to remain invested. You should be watchful of the financial goals that you wish to achieve through making different investments in the share market.
Also, before investing keep in mind that you must diversify your portfolio along with understanding the profile of your investor profile. It is very important to create an investment plan focusing on the revenue that you want to earn from your investments and the possible time period in which you wish to continue investing for earning that desired amount.
The stock market is a great money-making platform for the ones having the right knowledge of this industry. It is necessary to track the movement of stocks perfectly in order to get lucrative returns from the stock market. Therefore, complete and right information about the Stock market is very necessary. If you want to learn the right working of the stock market, then you must know how to invest in stocks. We hope, the information provided in this article was helpful for you. Feel free to ask any question related to the Stock market in our comment section. We will try to answer your Stock market-related queries as soon as possible.