Don’t know what to do with the money? Investing is a way through which you can reap the total rewards of your labor in the future. By making the right choice of setting aside your money to invest, you can secure your future. It is simple, Invest in Share Market.
It is true that before investing, you should know more about the investment vehicle that you are opting for. If you invest in the share market, you can put your money to work and grow your wealth in no time.
But how to invest in the share market is a long-term investment? Well, for that, it is best to know more about it to invest wisely.
What is Share Market?
A stock market or share market is where shares, bonds, and commodities are issued and traded publicly. It is a document that validates that you have ownership of a company.
If you want to invest in the Share Market, you should know that there are two primary stock markers: National Stock Exchange(NSE) and the Bombay Stock Exchange(BSE). These are the primary stock markets in India, and others are Multi Commodity Exchange(MCX) and Indian Energy Exchange(IEX).
The daily activities of the stock market are regulated by the Security and Exchange Board of India (SEBI). The stock market indices that are pretty common in India are SENSEX and Nifty.
Requirements you need to know to Invest in Share Market:
You cannot buy and sell the shares and stocks on the market directly; for that, you need to get in touch with a brokerage company that allows you to use the platform. Some of the significant points that you need to know to invest in the share market are:
- First of all, you need to open a trading account with the brokerage platform. The platform opens the Demat account for you to hold the financial securities in your name.
- After opening the account, you need to link your bank account with the Demat account and trading account. To open and connect these accounts, you need to provide your KYC documentation and other identity cards such as PAN cards and Aadhar cards.
- It may only take a couple of days for the verification process. After the verification process, you can trade with your brokerage platform and invest in the share market online.
The first thing that pops up in your mind when you invest in the share market online is how much it will cost you. You may need to pay for the transaction cost, Demat charges, and Taxes when you invest in share market.
When you invest in share market, you cannot sell or purchase shares directly. To invest in shares online, you need to contact brokers authorized to trade in the stock market. These companies allow you to invest in share with the help of their platform. The charges that you need to pay are:
Demat accounts are imported so that the NSDL or CDSL central security depositors can safeguard your interest. For operating and maintaining the account, you may need to pay a nominal annual charge. The charge range is between 100 to 1000 INR.
When you contact a broker to invest in shares, they take the commission or brokerage to facilitate your trade. The transaction cost also includes the taxes and dues paid to the government for each transaction you make.
When you invest in shares, you need to pay a percent of your profit to the government. You need to pay the percent from investment as a part of the tax. The tax depends upon the duration you hold the stock or share—the tax rate changes as per the Surcharge charged by the government.
The next important thing you should know to invest in the share market online is learning about the stocks categories. There are three types of categories of stocks as per the Market Capitalization:
Large Cap Stocks:
As per SEBI, these are the 100 stocks by market cap. This category consists of some of the most significant revenue-generating companies in the country.
If you are a beginner and are trying to invest in share market online without taking much risk, then these are the least risky ones. Large-cap stocks offer higher dividends and provide safety Capital Reserve in a longer duration.
Mid Cap stocks:
As per SEBI as the Mid Cap stocks are the top 102 to 250 ranked stocks. The company under this category is generally smaller than the large-cap stocks, and the range of cap is between INR 1000 to INR 25000 crore.
If you are ready to take the risk, you can invest in share market under the Mid Cap stocks, providing higher growth.
As per SEBI, the small-cap stocks are the top 250 top-rank shares or stocks. These types of stocks are highly volatile and are mostly connected with small companies.
If we compare this group with the other categories, small-cap stocks are riskier but have a higher potential for generating high returns. You can invest in share market under this category if you are looking for higher returns.
- After going through the share, you should wisely decide what you need to buy to invest in the share market. You can do that by understanding the amount of risk you are ready to take.
- Apart from that, you should also locate your funds for regular investment so that you can systematically increase your wealth.
- To achieve the desired goals, you should build a diverse portfolio and change it after a thorough research regarding the market. This way, you can invest in the share market online and secure your future with the right investment vehicle.
To conclude, you can invest in share market, but you need skill, patience, and research to support it correctly. Instead of going for a thoughtful investment, you should invest in share market online, considering several factors, and invest thoughtfully to achieve the goal.
In conclusion, investing in the share market can be a lucrative way to secure your financial future. By understanding the basics of the share market and following the necessary requirements, you can start investing wisely. Opening a trading account, linking it with a Demat account and bank account, and completing the verification process are essential steps. Be aware of the costs involved, such as transaction fees, Demat charges, and taxes. Familiarize yourself with stock categories based on market capitalization, including large-cap, mid-cap, and small-cap stocks, to assess the level of risk and potential returns. Make informed decisions, diversify your portfolio, and regularly invest to grow your wealth systematically. With skill, patience, and thorough research, you can navigate the share market and achieve your investment goals.