There has been a boom of awareness about the Indian Stock Market among the young Indian community. People have started to realise how investments (especially in the Indian stock market) can prove to be beneficial in securing a future with financial freedom. So, in this blog, we’ll go through a brief introduction to the stock market and walk you through the process of how you can start your investment journey. Let’s dive right in!
Understanding the Basics of Stock Market
First things first, the stock market is not a machine that can magically multiply your money. Instead, it is a hub where investors can buy or sell the shares of the companies (both private and public) that are listed publicly. Basically, you buy a small share of companies and own a part of that company’s profits and losses. So, if you’re not careful with your investments, you might have to bear some losses instead of booking profits. However, you need not worry as we’re here to help you avoid losses and book profits intelligently.
What is Stock Market?
As we just discussed, the stock market is a hub of financial entities including SEBI, stock exchanges (NSE, BSE), brokers, investors, and more where all these entities form a ‘stock market’. As an investor, you can buy and sell stocks to make your investments.
Typically, there are three beginner-friendly types of investment options in the stock market:
- Stocks (equity shares)
- SIP
- Mutual funds and ETFs
- Bonds and other securities
Note: As a beginner, you can invest in these assets and make your way through profits. However, it can be a little difficult for you as a beginner in which case, you can use some professional help to learn more about these assets and how you can invest in them to book profits.
Steps to Start Investing in India
Here’s how you can start investing in the stock market
Step 1: Open a Demat and Trading Account
Before you can start investing, you must open a demat account. “What is a Demat account?” you might ask. A demat account is like a savings account where instead of saving your money, you hold your shares and assets for smooth transactions. Demat accounts are also regulated by SEBI. There are many investment applications like Groww that offer free Demat account creation or you can ring up your bank to check if they offer free Demat accounts.
Step 2: Complete the KYC Process
Once your demat account is set up, you must complete your KYC (Know Your Customer) procedure by offering proof of your identity and income with your PAN, Aadhaar, and bank account linkage. You can opt for either offline or online KYC but we’d suggest the ‘online’ method as it’s quicker and hassle-free.
Step 3: Learn the Basics of Investing
You can start by learning the basics of the share market, charts, candles, fundamental analysis, technical analysis, and more before you start actual investments. Stock market investment is a vast topic and it’s best if you can get professional training so you know the ins and outs of the share market. For professional training, we’d suggest the best stock market coaching that we know of which is the Platinum Institute of Financial Market where their experienced trainers will sharpen your investment skills and train you about every aspect of investment that you can use to book profits and take a step further towards financial independence.
Step 4: Choose Your Stock Market Investment Strategy
There are two types of investment strategies; Long Term Investment & Short Term Investment, both of which can have different effects on your investment plans. Here’s how you can choose the best one for yourselves:
| Short Term Investments | Long Term Investments |
| Less than 1 year (weeks to months) | More than 3 years (typically 5+ years) |
| Higher volatility due to market fluctuations Pro: Quick returns possible Con: Higher risk of loss | Lower volatility over time Pro: More stable growth Con: Takes longer to see returns |
| Potential for quick gains Pro: Fast profits if timed well Con: Gains can be inconsistent | Compounded growth and wealth creation Pro: Higher returns over time Con: Requires patience |
| High liquidity; easier to sell assets quickly Pro: Quick access to funds Con: Frequent trading may incur higher costs | Lower liquidity; the holding period is longer Pro: Less frequent trading saves costs Con: Funds are locked for a long time |
| Short-term capital gains tax (higher tax rates) Pro: Can benefit from market opportunities Con: Higher tax burden | Long-term capital gains tax (lower tax rates) Pro: Tax-efficient Con: Must hold for years to get tax benefits |
Before you make any investments, you must analyse the risks involved in the shares and assets you’re buying. Moreover, you can try diversifying your investments across multiple assets so all your money isn’t affected during market crashes or fluctuations. For best results, you can allocate your investments in the following manner:
- Mutual Funds: 25%
- SIP: 35%
- Penny shares: 5%-15% (optional)
- Government and Sovereign Gold Bonds: 25%
This way, you can allocate your income in a safe manner and won’t have to worry about market crashes. The key is to not panic and keep your cool while waiting for the market to rise and shine again.
Tips for Safe and Smart Investing in Stock Market
Start Small and Learn Gradually: Investing with a small capital to gain experience
Stay Updated and Research Thoroughly: Follow financial news and market trends by searching for reliable terms on google such as ‘live Sensex today’ and ‘stock market today’, to get reliable news. One can also follow market gurus for updates. (Think smart before following any advice though)
Avoid Common Mistakes such as overtrading and chasing quick profits and ensure that you’re diversifying your investments with intelligent risk management.
Towards A New Investment Journey!
We hope this blog could teach you how you can start your investment journey as a beginner. Just don’t take unnecessary risks, diversify your investments, don’t fall for short term money making traps, and don’t learn and develop your skills along the journey. And don’t forget to get professional training from Platinum Institute of Financial Market to step up your investing game.