How to invest in shares – the steps you need to follow

New investors are often confused about how to invest in shares. But such investors need to first understand what this market is and how it works. A share market is a platform on which public companies can issue units of shares to investors. A company must be first listed on the primary market through an IPO and can conduct trades on the secondary market. As a share market investor, you can purchase share units of a particular company and sell it upon booking profits. Investing in shares is one of the best ways to create a corpus in a shorter span of time. Here’s how you can go about with your share market investments

How can I invest in share market?

1. Determine your investment goals and risk appetite

Before you start investing in the stock market, it is extremely essential for you to determine your investment goals and your risk appetite. You need to determine the amount of money you can invest in the market and the present and future goals you intend to fulfil from the investment. Your risk appetite helps you ensure that you are not over-investing in the stock market and jeopardising your basic monthly expenses. Consider your monthly budget, outgoing expenses, debts, EMIs, etc. and determine the amount you can invest in the share market. You must also consider your tax liabilities while investing.

2. Determine your investment strategy

After determining your investment capacity, you need to analyse the share market and frame an investment strategy that works for you. You must identify the different types of stocks; consider their performance in the last 2-3 years and then pick the ones that seem like best performers. For instance, if your investment strategy is to pick a stock that provides additional income sources, you should invest in dividend-paying stocks. As such, you must choose stocks based on different categories to fulfil your different investment needs.

3. Enter the market

This is the most crucial aspect of stock market investments. You must enter the market at the right time; when the prices of your chosen stocks are low. This helps you maximize your investment and earn high profits. You should also exit the market when your stock is trading at the highest price.

4. Execute your trade

Once you have booked a profit, you can execute the trade through online or offline share trading channels. If you prefer online trades, you need to open a demat account. You can get good demat account deals from companies like Angel Broking Limited. For instance, new customers are charged only?15 for trades of up to?50,000 and?30 for trades exceeding?50,000. Angel Broking Limited also offers existing customers exciting demat account offers like gift vouchers worth?1,000 from several reputed brands for referring customers.

5. Keep monitoring your investment portfolio

It is important to keep monitoring your investment portfolio every day. Remember that the share market is dynamic and fluctuates constantly. Thus, tracking your investments helps you enter and exit the share market at the right rime. Continue to research about companies you wish to invest in to maximise profits and minimize losses but avoid taking impulsive decisions.

It is very essential that you understand how to invest in shares before you start trading. Ensure you learn and understand all the terminologies related to share market investments. You must also remember that all share market investments come with an element of risk, so it is better to go slow in the beginning. You can increase your investments once you get the hang of how the market functions.

Maithili Pawar is a finance professor. She has written on share market basics. Through this article, she has provided detailed information on stock market.