“I made my first investment at the age eleven. I was wasting my life up until then” ~ Warren Buffett
For a new investor, the stock market can feel a lot like legalized gambling – “People place their bets! Randomly choose a stock based on gut instinct and water cooler chatter! If the price of your stock goes up — and who knows why? — you win! If it drops, you lose!” Isn’t that why so many people got rich during the dot-com boom — and why so many people lost their fortunes in the recent recession?
But always remember:
No matter how great the talent or efforts are, something just take time: You can’t produce a baby in one month by getting nine women pregnant.
It takes time for investment values to build up – it doesn’t happen overnight. Just add children take time to grow into adults, businesses take time to grow in value.
If you’re wondering how you can start your first investment then you lucky today because that’s what I’m going to deliver now.
Probably, you may have also searched it in Google but frustrated with the results (even did I, when I was in the stage that you’re in now)
This induced me to write a blog-post so that you can follow a perfect roadmap instead of just reading craps here and there on web which are not much meaningful to beginners.
Answer is divided into four sections (I’ll keep it short)
- Understand stock market (short overview)
- Get started with a broker (short process to find a broker)
- Investing style (providing you’re a beginner)
- Evaluate your performance (most important if you want to beer successful)
(Section – A)
You may have a “supermarket” that sells food nearby your house. The reason you go the supermarket is because you can go to one place and buy all of the different types of food that you need in one stop — it’s a lot more convenient than driving around to the butcher, the dairy farmer and the baker.
The BSE is a supermarket for stocks. It can be thought of as a big room where everyone who wants to buy and sell shares different companies can go to buy and sell.
That buying and selling are of two types:
- Intra day: the trading execute on only one single day.
- Inter day: trading is executed in T+2 day.
Interested reader can read it in more descriptive and lucrative way here ~ How exactly does trading (stock market) work?
(Section – B)
Now after having a short overview of stock market, let’s understand the working.
You can’t directly invest in stock market. So, you should find a broker. He will act as a mediator to buy/sell your shares. There’s nothing to know more about broker.
But still one should choose a broker with great attention. Some brokers charge so high that most of your profit is swallowed by their charges. Recommended read – How can I reduce my stock brokerage? (see details for stats).
If you don’t want to do your own research to find a broker then for now I’ll recommend you to invest through Zerodha. They provide cheapest brokerage. As a headstart you can trade with them. Later on when you gain some expertise, choose your broker as per your requirement.
Procedure is simple to get started. Fill up a short form and they will contact you in 24 working hours then they guide you the rest.
(Go on. I’ll wait. It’ll not even take couple of minutes)
You can start with whatever amount you desire, say 500, 1k or 5k……
As you’re a beginner, I’ll not prefer to get you in deep.
Just want to say one thing, go for short term trading (although, I’m a great enemy of short term trading) but as a beginner you’ll not invest much so you should try with short run. If you invested for long run, you’ll lose your interest in sometime. And also put the amount which will not make you unhappy, if you loosed them.
Why I’m saying you to invest for short run is because at your initial stage you’ll get some market tactics and working. Also it’ll take time to get familiar with the terms PE ratio, EPS, DPR…. etc so just go for short and track your performance every day.
Important – Download moneycontrol app from google play. It’ll give you each and every relevant information.
This is the most important stage to make yourself a successful investor. Everyday track your profit and loss. You don’t have to give hours, 15 minutes will be enough.
What you have to do is whenever you have a profit then go in flashback and figure what made you invest in this share and mark that criteria as a good evaluator of share. And same applies with loss position in negative way.
Everything sucks in beginning.
You’ll try your luck.
Finally you’ll get out of the thing.
But always remember, everything sucks in the beginning. Gather some courage to face them.
Don’t get out of the problem rather figure out what made you get in the problem.
In the world of investing. You may lose or win but what values are the experiences you gained. Although that will not make you a great investor now but will act like a base deck in future.