Take a quick look at the fundamentals of the stock market guide discussed here to boost your confidence in taking the first step towards investing in stocks

How to Start Investing in Stocks: A Beginner’s Guide

Have you been planning to invest in the stock market for some time now but could not understand where to begin? Can lack of savings be a reason that is stopping you from investing in the market?

In that case, let us tell you right at the beginning that contrary to your belief –

“Wealthy people invest first and spend what is left.

Broke people spend first and invest what is left!”

So, to join the winning side, make sure to prioritise your savings each day and every day!

But, if your reason to not invest in stocks is lack of knowledge about the market, you need not worry anymore!

Take a quick look at the fundamentals of the stock market guide discussed below to boost your confidence in taking the first step towards investing.

Things to Bear in Mind before investing

Before you tread on the unpredictable path of the stock market, you should take these following pointers into consideration –

1.Identify your investment goal and your risk appetite

As a beginner, your first step should be to recognise your financial goal and how much risk you can stomach at present. Generally, investing in shares is considered to be a riskier alternative to mutual funds. However, at the same time, it is popular for its ‘high risk-reward’ characteristic.

Do you think you are not ready to weather risks that accompany stock market investments?

Then remember Benjamin Graham has pointed out – “Successful investing is about managing risks, not avoiding it.” So put some thought into creating some risk management strategies that will help you cushion stock market investment like a pro!

Ideally, beginners with limited capital are advised to park their money into shares for a long investment horizon. Since stocks do not necessarily follow the ‘Get Rich Quick’ strategy, you can align stocks in investment to achieve long-term goals.

2.Develop an approach to invest in stocks

Once you manage to identify your risk appetite and align your financial goals with your convenient investment horizon, make sure to pick an approach that matches your requirement.

The most common stock market investment approach includes value investing, growth investing, dollar-cost investing, and momentum investing, and they usually factor in both risk tolerance and capital requirement.

3.Make sure to learn how to read stock charts

Well, reading stock charts can be quite intimidating at first. However, once you become familiar with the chart’s components, you will be able to read it without any trouble.

When you glance through a stock chart, you will come across these components –

• Chart Type
• Timeframes
• On-Chart Indicators
• Off-Chart Indicators
• X-Axis or Time Scale
• Y-Axis or Price Scale
• Drawing Tools

Also, make a note to self to find out about plotting price data on stock charts and differences to have a clear concept right from the get-go. Generally, the most common plotting methods include – line, candlestick, point and figure and open, high, low, close or OHLC.

4.Brush your basics

“Without a solid foundation, you will have trouble creating anything of value.” – So, to create something of value, make it a point to build your basics of the stock market investment. For instance, you can take some time out of your busy schedule to become familiar with these following –

• Demat and trading accounts
• Role of stop-loss order
• Buy price and target sell
• Trading place

Besides these, make an effort to find out things like – margin trading and penny stocks. This will allow you to distinguish between what’s good for your investment endeavour and what is downright risky. Above all, having a fair idea about basics like – how to invest in stocks will make you more confident about stock-based investments.

5.Choose your investment broker carefully

Probably one of the most stressed upon stock investment tips is to be thorough when it comes to selecting a market intermediary to open an investment account with. To bank upon professionals’ expertise, pick a SEBI or stock exchange registered investment broker as your market intermediary.

Another bonus tip to keep in mind is to – check the companies’ credentials and their recent share-related announcements. This will prevent you from missing out on profitable invest-oriented announcements and allow you to generate more earnings.

So, if you want to start investing– make sure to back your market knowledge with reliable expertise and become familiar with stock market trends. Such an approach will come handy in more ways than one as it will help pick profitable stocks.

Lastly, it is essential to remember that stocks are not lottery tickets!

You need to have substantial knowledge about the stock market and shares’ characteristics before you invest in stocks. So, before embarking on your stock market investment journey, make sure to research and analyse the prospects of different types of shares and align the same with your goals accordingly.