Stock investment has proven to be a lucrative option for long-term investors. It can help grow your income even during the economic recession and downturn. Before you get started with stock trading, you must learn the basics of the share market. It’s important to get familiar with the terminologies and skills needed for stock investment. You may also need to research different types of investment instruments out on the market. You need to create an account on the online trading platform for trading. In this post, we are going to discuss the top 6 steps for investing in stocks. Let’s get started:
1. Select the Method for Stock Trading
Basically, there are two ways you can invest in stocks. One, you could try the DIY investment method. It can be a little challenging for beginners as you are supposed to execute the entire investment process on your own. Things get a little complicated when you have to set up your investment portfolio.
Another option is to leave the task to a fund manager. You could hire a brokerage company to get the robo-advisors. They will guide you throughout the investment process. It is a great way to start your investment portfolio, especially if you are new to the share market.
2. Set up an Investment Account
The next step is to open an investment account. Again, you could create an investment account in two ways. We highly recommend you hire a Robo-advisor as they can carry out all the legal work seamlessly. The professional brokerage firms help you determine your investment goals and set up an investment profile that matches your objectives.
They handle the entire investment management process for you. It might sound super expensive, but it only costs a small fee (far lesser than the charges of a human fund manager). Mostly, the Robo-advisors have a fixed fee, which is Jo only 0.25 percent of your investment account balance. Another option is to hire a broker for the job. It might cost you a little extra, but you could rest assured that a professional broker will offer personalized services.
3. Understand the Two Common Types of Investment Instruments
Even if you choose the DIY investment account registration, there is nothing to worry about. You have two types of investment options i.e. mutual funds and individual stocks. Mutual funds involve a range of stocks that are purchased in one transaction. In order to diversify your investment portfolio, you could purchase different types of mutual funds.
Mutual funds investment starts for as low as INR 500. You could also opt for a single share investment by buying shares from a specific company. You could purchase shares from different organizations to improve your investment portfolio and mitigate the risks. Individual stocks can grow your wealth, however, that’s only possible when the value of the stock increases.
4. Stick to Your Investment Budget
The total capital you need for stock investment depends on the price of the share of the company. Each company has shares of different values. The price could range from a few bucks to thousands of dollars. If you have a tight budget, then consider opening a Systematic Investment Plan account. It allows you to purchase shares for INR 500. Other than that, there are many low-budget investment plans. You could discuss your budget and requirements with the brokerage firm to plan your future investments.
5. Consider Long-term Trading
There is no denying that stock investments have proven to be a lucrative option for long-term investors. You must opt for the individual stocks only when you are certain about the company’s long-term growth. Usually, people develop a habit of checking the stock value frequently. While it may sound a good idea to stay up-to-date with the current stock value, you shouldn’t change your decisions based on the stock price.
Day trading won’t make you rich overnight. Long-term investments, on the other hand, can generate a significant amount of profit. It has high growth potential. Most importantly, it can bring you long-term capital gains. All in all, the longer you stay in the investment market, the higher the chances you will make significant profits from the investment. Remember that stock prices keep changing from time to time. In fact, the value of shares changes every minute.
6. Manage Your Investment Portfolio
If you are a regular investor and are planning to grow your portfolio, then it makes sense to visit your investment profile every now and then. It will help you ensure that your stock investment are aligned with the long-term investment objectives. To those who are nearing their retirement period, it’s best to switch to fixed-income investments. Never limit your investment to the shares of a particular company. Market risks are common these days. It is important to diversify your investment portfolio for the best returns.
Gill Broking makes your Equity Investment & Trading Experience simple with major exchanges like NSE & BSE.
