Investing in stock market 101

Before you start investing in the stock market, we would like to quote Worn Buffet words

Rule number 1 Never loose money. Rule number 2 Never forget rule number1

To invest in the stock market, you should have a Demat account and a bank account.

If you don’t have a Demat account, you can open it with Zerodha here

Once you have an account opened, you are all set to start your journey in stock market investment.

Investing money for the long term is different from investing money for the short term; both need different skill sets. Like, how to read the companies balance sheet vs. reading the stock daily charts.

We have a variety of options to invest in based on your financial requirements. Let us see one by one

  • IPO (initial public offering) is when any company wants to go public and share its profit with ordinary people or institutions. Here equities will be allocated to stakeholders from the primary market.
  • Equities or securities refer to stocks traded in the secondary market that can be bought or sold through exchange brokers like ABM, Zerodha, or any other stock brokers
  • ETF (exchange-traded fund) trades in secondary markets like stocks, but this is a combination of securities bundled together by AMC companies. For example, Kotak Nifty EFT combined all the shares in the listed Nifty index provided by Kotak. If you are a beginner and want to take less risk, this is the best starting point for all beginners. As ETFs have moderate risks generally.
  • F and O (options and futures).  F and O’s are mainly used to hedging against our investment. These means you use to protect your investment against the volatility of the stock market. However, we should only venture with a proper understanding of the stock market and its underlying mechanism.
  • Commodities trading: here you buy and sell commodities securities through exchange broker like MCX, when we are talking about commodities this is essential commodities like Gold, copper, oil, and many other. Commodity trading can be used as hedging options to protect market volatility.
  • Of course, we have to talk about mutual funds When we talk about the stock market. However, most of us would have invested in mutual funds without knowing where our money would get invested. Mutual funds are manage by fund managers, so-called experts. And we have to pay a fee for managing our funds to AMC company from where you would purchase the mutual fund. We are not great advocates of mutual funds, but if you plan to invest your money here. It is better to invest in index funds or good quality funds.  For mutual fund investment, you do not need a Demat account.

We will deep dive into each of these instruments in our future blogs. These will give you a better understanding of each of these terms or stock instruments. And we are making videos detailing each of the stock instruments.

We want to bring to your notice that is speculating is not equivalent to investing. When you assume, that means you are ready to take some risk. So please make an informed decision.

Talking about speculating, do you think ICO (initial coin offering)is a good investment? Join us in the comment section to discuss

In our next blog, we will talk about real estate and insurance, which are fascinating topics, and we will let you know if it is the right time to invest in real estate?

We thank you for making it so far and sharing your valuable time. And we see you in our following blogs.

One thought on “Investing in stock market 101

Leave a Reply