The Future of Investment - "Stock Market"
“Stock Market” -The Future of Investment, this is a blog which will give you the idea of a fantastic upcoming
platform of investment to earn money and some tips for beginner, intermediate and expert in the field of
investment.
As the title itself says that this blog is basically on “Stock Market- The Future of Investment”. So many of
you would have listened to this term before, "Stock Market" so What is the stock market? How can we
invest to earn money? All your queries and doubts will be resolved here. The main motive of this
blog is to teach more and more people about the Stock Market.
Please read the blog carefully. So let's begin.
A stock market or share market is a collection or let's say a market of buyers and sellers of shares which acts for ownership claims on businesses. You can understand this by buying some part of the whole.
A stock market is an exchange where brokers and traders can buy and sell shares or bonds. Many large companies have their stocks listed on the stock exchange (stock market). This makes the stock more eye-catchy and thus, more attractive to many investors. The conversation may also act as a mediator of settlement. These and other stocks may also be traded "over the counter", that is, through a dealer. Some large companies will have their stock listed on more than one exchange in different countries, to attract international investors.
Please read the blog carefully. So let's begin.
What is Stock Market?
A stock market or share market is a collection or let's say a market of buyers and sellers of shares which acts for ownership claims on businesses. You can understand this by buying some part of the whole.
A stock market is an exchange where brokers and traders can buy and sell shares or bonds. Many large companies have their stocks listed on the stock exchange (stock market). This makes the stock more eye-catchy and thus, more attractive to many investors. The conversation may also act as a mediator of settlement. These and other stocks may also be traded "over the counter", that is, through a dealer. Some large companies will have their stock listed on more than one exchange in different countries, to attract international investors.
Before starting, I would like to clear some of the myths of the stock
market.
So before entering in the market you should wipe up these thought from your mind.
Now the question arises that where can we buy the share. Is there anything that we can go to the company and purchase the shares?
The answer is an absolute NO.
In India there are two major shock exchange or say shock market first is the BSE i.e. Bombay Stock Exchange and second is the NSE i.e. the National stock Exchange.
- Usually people think that stock market is about gambling.
- Also, people do fear to invest in the stock market because they think that it’s precarious, requires an excellent knowledge of finance.
- A considerable sum of amount is needed in the stock market, to earn money.
So before entering in the market you should wipe up these thought from your mind.
Now the question arises that where can we buy the share. Is there anything that we can go to the company and purchase the shares?
The answer is an absolute NO.
In India there are two major shock exchange or say shock market first is the BSE i.e. Bombay Stock Exchange and second is the NSE i.e. the National stock Exchange.
BOMBAY STOCK EXCHANGE (BSE)
BSE is the oldest stock exchange of India, which was established in 1875; it also Asia's oldest stock exchange. The BSE is the world's 10th largest stock exchange. More than 5500 companies have been listed in the BSE.
NATIONAL STOCK EXCHANGE OF INDIA (NSE)
NSE is now one of the leading stock exchange in India. It was formed in the year 1992. The reason of being India's leading stock exchange was to bring the revolutionary concept of dematerialization exchange with a fully automatic and electronic trading system. More than 1700 companies have been registered in NSE.
What is the use of buying shares? or What is the benefit of buying shares?
The answer could be understood by a situation, why we invest your money? The solution is for multiple investments. So where do we invest money in banks (FDs) mainly? At what rate do they give the interest..? Maybe at the rate of 5 or 6 per cent or max to max 7 per cent. But in the case of the Bull market, the interest rate varies from 14 to 18 per cent. So I think the answer is petty much clear.
Why do Stock Market has the bad name?
Now many of you may wonder that the stock market is giving enormous result in multiplying your money but why most of the people do not invest in the stock market. Some of the main reasons are the scams that have happened in 1986-1992 and 1998-2001 that shocked the whole market. These two incidents took the entire trust of the people from the market. Secondly, people who invest without doing the proper research of the company and bear the losses spread rumours in society.
How to invest in share market?
There are a few things that you should know before you go to invest in the stock market. People get high returns in the stock market due to the effect of compounding. Before investing, the investor should have trading as well as a Demat (dematerialised) account. Trading accounts for the management of cash and equity, whereas a Demat account manages shares in a virtual form. And it is nowadays straightforward to open a Demat account online. Now let's see the essential requirements for opening Demat account online.
Things required are:-
Bank statement, Aadhaar card, PAN Card, A Broker. These documents are basically for your identification and your income proof. After submitting these document within ten days, your Demat account will be ready for use.
Now let’s understand the stock trader
Stock Traders are the one who trade equity securities. Their main goal is to buy and sell the shares of several different companies to gain profit for their clients.
These traders play an essential role in the whole transaction of buying or selling the stock. Also, they are the key person because they are the primary source which provides liquidity. Here liquidity means having a balance between the sellers and the buyers so that you can buy and sell shares quickly.
They have good knowledge about the market as they observe the trades, i.e. the demand and supply in the market also, they look to the past trends of the company and look into the fundaments so that there are fewer chances of loss.
Types of stock traders include day traders, swing traders, buy and hold traders, and momentum traders.
Some Important terminologies
If you now enter the dream market then sure you will face some problems in understanding the different terminology so here please look to understand the things better.
INVESTOR: - People or the organization who invests in the company so as to gain profit.
FACE VALUE: - The original price at which the stock is listed in the Stock Market.
LONG TERM CAPITAL GAIN: - Long term capital gain is the profit earned by the investor after holding the share for one year.
DIVIDEND: - This is a return on the investment on the share that is being given by some company.
STOCK SPLIT: - The face value of the stock splits so that more people can afford that share.
IPO: - Initial Public Offering of the stocks by the company so that there is ample amount of stocks available for the people to buy.
SEBI: - Securities and exchange board of India which regulates the whole transaction from buying the stocks to its sell.
DP: -Depository participants are the brokers through which you can buy or sell the shares.
PROMOTER: - Owner of the company.
EQUITY: - These are the share or the partnership of the particular company.
INTRADAY: - Shares to be bought and sold on the same day.
DELIVERY: - Shares to be bought and sold anytime leaving the same day.
EPS: - Earning per share is the profit earn by the investor per share.
P/E RATIO: - It is division of stock price to the EPS known as the earning per ratio.
BROKER: - A person or a firm which manages the transaction between the buyer and seller.
These are some keywords that you will undoubtedly face when you enter the stock market. Also, there are some guidelines of SEBI and the NSE, BSE trade which they want us to follow.
1. Deal only with registered intermediaries - check the registration certificate of the intermediary with you are dealing. It allows recourse to regulatory action.
2. Beware of fixed/guaranteed returns schemes. Brokers or any of their representatives are not authorized to offer fixed/guaranteed returns on your investment or enter into any loan agreement to pay interest on the funds/securities provided by you.
3. Do not fall prey to emails and SMSs luring you to trade in stocks/ securities promising huge profits.
4. Ensure to fill all the required details in 'KYC' document by yourself and receive a duly signed copy of your 'KYC' documents from your broker. Check for all conditions that have been agreed and accepted by you.
5. Opt for electronic (email) contract notes/financial statements only if you are computer savvy and have an email account of your own. Don't ignore any emails/SMSs received with regards to trades done by you. Verify the details of the same and report a discrepancy, if any, to your broker in writing immediately.
6. Trade verification facility is also available on the NSE website.
7. Check the frequency of accounts settlement opted for and verified your monthly/quarterly settlement statements. You should bring any discrepancies observed therein should be brought to the notice of your broker in writing immediately.
Mistakes done by beginners
These were the common mistakes done by me also. Please don’t commit these mistakes. Always believe in yourself that you are doing the right thing. Always see the trend how the companies are performing for at least 5 years. Try to buy share when the price is undervalued and sell when the market is running to gain enormous profit. Always try to make the investment for 3 to 5 years don’t get panic if the price are fluctuating within that period of time.
TIPS AND TRICKS FOR GOOD INVESTMENT
CONCLUSION
In this blog we have covered a lot of material to orient you in the world of stock market, Where and how to invest, what are the different terminologies are used, different rules and regulations of SEBI mistakes done by beginners and even though there is always more to learn and explore, but always believe in your investment and keep calm if something goes wrong.
I hope my tips on investment helped you to reach the driver’s seat! In addition, doing practice, being attentive, curious and being analytical will help you sharpen your skills and discover progress in your work.
BSE is the oldest stock exchange of India, which was established in 1875; it also Asia's oldest stock exchange. The BSE is the world's 10th largest stock exchange. More than 5500 companies have been listed in the BSE.
NATIONAL STOCK EXCHANGE OF INDIA (NSE)
NSE is now one of the leading stock exchange in India. It was formed in the year 1992. The reason of being India's leading stock exchange was to bring the revolutionary concept of dematerialization exchange with a fully automatic and electronic trading system. More than 1700 companies have been registered in NSE.
What is the use of buying shares? or What is the benefit of buying shares?
The answer could be understood by a situation, why we invest your money? The solution is for multiple investments. So where do we invest money in banks (FDs) mainly? At what rate do they give the interest..? Maybe at the rate of 5 or 6 per cent or max to max 7 per cent. But in the case of the Bull market, the interest rate varies from 14 to 18 per cent. So I think the answer is petty much clear.
Why do Stock Market has the bad name?
Now many of you may wonder that the stock market is giving enormous result in multiplying your money but why most of the people do not invest in the stock market. Some of the main reasons are the scams that have happened in 1986-1992 and 1998-2001 that shocked the whole market. These two incidents took the entire trust of the people from the market. Secondly, people who invest without doing the proper research of the company and bear the losses spread rumours in society.
How to invest in share market?
There are a few things that you should know before you go to invest in the stock market. People get high returns in the stock market due to the effect of compounding. Before investing, the investor should have trading as well as a Demat (dematerialised) account. Trading accounts for the management of cash and equity, whereas a Demat account manages shares in a virtual form. And it is nowadays straightforward to open a Demat account online. Now let's see the essential requirements for opening Demat account online.
Things required are:-
Bank statement, Aadhaar card, PAN Card, A Broker. These documents are basically for your identification and your income proof. After submitting these document within ten days, your Demat account will be ready for use.
Now let’s understand the stock trader
Stock Traders are the one who trade equity securities. Their main goal is to buy and sell the shares of several different companies to gain profit for their clients.
These traders play an essential role in the whole transaction of buying or selling the stock. Also, they are the key person because they are the primary source which provides liquidity. Here liquidity means having a balance between the sellers and the buyers so that you can buy and sell shares quickly.
They have good knowledge about the market as they observe the trades, i.e. the demand and supply in the market also, they look to the past trends of the company and look into the fundaments so that there are fewer chances of loss.
Types of stock traders include day traders, swing traders, buy and hold traders, and momentum traders.
Some Important terminologies
If you now enter the dream market then sure you will face some problems in understanding the different terminology so here please look to understand the things better.
INVESTOR: - People or the organization who invests in the company so as to gain profit.
FACE VALUE: - The original price at which the stock is listed in the Stock Market.
LONG TERM CAPITAL GAIN: - Long term capital gain is the profit earned by the investor after holding the share for one year.
DIVIDEND: - This is a return on the investment on the share that is being given by some company.
STOCK SPLIT: - The face value of the stock splits so that more people can afford that share.
IPO: - Initial Public Offering of the stocks by the company so that there is ample amount of stocks available for the people to buy.
SEBI: - Securities and exchange board of India which regulates the whole transaction from buying the stocks to its sell.
DP: -Depository participants are the brokers through which you can buy or sell the shares.
PROMOTER: - Owner of the company.
EQUITY: - These are the share or the partnership of the particular company.
INTRADAY: - Shares to be bought and sold on the same day.
DELIVERY: - Shares to be bought and sold anytime leaving the same day.
EPS: - Earning per share is the profit earn by the investor per share.
P/E RATIO: - It is division of stock price to the EPS known as the earning per ratio.
BROKER: - A person or a firm which manages the transaction between the buyer and seller.
These are some keywords that you will undoubtedly face when you enter the stock market. Also, there are some guidelines of SEBI and the NSE, BSE trade which they want us to follow.
1. Deal only with registered intermediaries - check the registration certificate of the intermediary with you are dealing. It allows recourse to regulatory action.
2. Beware of fixed/guaranteed returns schemes. Brokers or any of their representatives are not authorized to offer fixed/guaranteed returns on your investment or enter into any loan agreement to pay interest on the funds/securities provided by you.
3. Do not fall prey to emails and SMSs luring you to trade in stocks/ securities promising huge profits.
4. Ensure to fill all the required details in 'KYC' document by yourself and receive a duly signed copy of your 'KYC' documents from your broker. Check for all conditions that have been agreed and accepted by you.
5. Opt for electronic (email) contract notes/financial statements only if you are computer savvy and have an email account of your own. Don't ignore any emails/SMSs received with regards to trades done by you. Verify the details of the same and report a discrepancy, if any, to your broker in writing immediately.
6. Trade verification facility is also available on the NSE website.
7. Check the frequency of accounts settlement opted for and verified your monthly/quarterly settlement statements. You should bring any discrepancies observed therein should be brought to the notice of your broker in writing immediately.
Mistakes done by beginners
- Listening to others while buying the company share.
- Investing by not seeing the trends of how the company’s share is performing.
- Sell as soon as the market goes down and buy when the shares are at their peak.
These were the common mistakes done by me also. Please don’t commit these mistakes. Always believe in yourself that you are doing the right thing. Always see the trend how the companies are performing for at least 5 years. Try to buy share when the price is undervalued and sell when the market is running to gain enormous profit. Always try to make the investment for 3 to 5 years don’t get panic if the price are fluctuating within that period of time.
TIPS AND TRICKS FOR GOOD INVESTMENT
- Try to buy the shares when their prices are undervalued.
- Hold the shares for at least 3 to 5 years.
- At beginning invest small amount to get some experience about how the market works.
- See the EPS and P/E RATIO of the company while doing the investment.
- When you buy a company’s share you are the partner of that company and you will be a partner of their profit and loss too.
- Read the whole documentation because these may have some hidden charges.
- Try to select companies which pay you a good percentage of dividend.
- Try to invest in IPO’s of those companies which have a good track record.
- Read books so as to gain knowledge for doing better investment. One of the most famous book is “The
Intelligent Investor”
By:-Benjamin Graham. - Do some basic fundamental and technical analyses of the stock and the company before buying the shares.
CONCLUSION
In this blog we have covered a lot of material to orient you in the world of stock market, Where and how to invest, what are the different terminologies are used, different rules and regulations of SEBI mistakes done by beginners and even though there is always more to learn and explore, but always believe in your investment and keep calm if something goes wrong.
I hope my tips on investment helped you to reach the driver’s seat! In addition, doing practice, being attentive, curious and being analytical will help you sharpen your skills and discover progress in your work.