Investing in stocks does not mean just ‘buying and selling shares’. Investing it’s a process of creating wealth to achieve long term goals. “Investing in high quality stocks and holding them for correct periods is the only way to create wealth”. Due to this statement following questions arises for beginners when investing in stocks.
- What are high quality stocks?
- How to select high quality stocks?
- What is correct holding period?
- When to buy and when to sell stocks?
If u want answer of all the above questions must read 2 books given in step 1.
By following some simple steps before Investing in stocks market. You can reduce the chance of making mistakes and get the best results.
Also read – high return investment options
Step 1: Learn the Basics, Must read 2 books at least
The Intelligent Investor by Benjamin Graham
Security Analysis: Sixth Edition, Foreword by Warren Buffett by Benjamin Graham, David Dodd
Turn on the TV news or open a newspaper or browse the internet. You will probably come across some information about the stock market.
Step2: Assessing Your Risk Tolerance
Risk and Reward go hand in hand.
High return with little risk is the aim for any investor.
Start with minimum capital.
Step3: Choose a Stock broker
Choosing a financial advisor is a big decision. One of the biggest decisions that you will make as an investor is which brokerage company you will use.
Two types of stock broker available. You can choose one.
1 Full service broker – Provide more service but at a higher cost.
2 Discount broker – Fully Online at a cheaper cost.
Step 4: Apply for a Demat account
Open a Demat account with any SEBI registered stock broker in India.
Proof of address
One recent photograph
Step 5: Follow the market and create your strategy
Once you understand the basics, very easy to understand the markets.
Your strategy for stock picking should be short term or long term.
Warren buffet, the words most successful investor. One of the world richest person created his fortune from 22% annualized return over more than 50 years from “Investing in stocks”.