How to Invest in Share Market a Beginners Guide

In this post we will learn how to invest in share market, assuming you already know the basics of what a share/stock market is.

You might have probably heard about how some acquaintance of yours got rich of the stock market, or a retired relative who lives off dividends from the stock market or maybe a friend who regularly trades stock, options and futures. Ultimately this has piqued your interest and you want to get into the stock market so you can invest money in the share market or maybe learn to trade intraday stocks. So this post is a basic beginners guide on how to invest in share market in India.

How to Invest in Share Market in India:

Step 1: Choosing the Right Stock Broker

Before you want to buy stocks online , it’s important to know that you cannot trade shares directly. Instead, you’ll need to go through SEBI-registered brokers and investment platforms to invest in stocks. There are plenty of discount stock broker who charge a very small fee to buy stocks for you. Zerodha, Groww, Angel One, Upstox, Sharekhan, 5paisa, Paytm Money are some of the top stock brokers in India. Please check their charges page to know how much they charge for buying and selling shares. You can also use stock broker service offered by your bank. Before you learn how to invest in share marker there are a few things that are required:

1. Identity Proof: A government-issued ID proof like Aadhaar card, driving license, passport, or voter ID card.
2. Address Proof: Aadhar, utility bill, bank statement, or passport. We recommend to make things simpler to use Aadhar card for both Identity and Address proof.
3. Pan card: If you do not have a pan card you can apply for a e-pan in the income tax website where you can get a pan allotted to you in 30mins. Here is the link to the income tax site on how to create a e-pan.
4. Bank account: To send and receive money for buying and selling of shares.

Once you have all these ready, most of the account opening process is self explanatory, where they ask your you to fill up details and complete necessary checks.

Step 2: Opening a Demat Account

Before you start investing in the share market you need to open up a demat account. If you are a complete beginner, a demat account is like a digital wallet where you can store your investment like shares, mutual fund investment and bonds. Usually when you finish making a account with a stock broker, the stock broker usually opens a demat account on your behalf to store the shares you purchase. So you need not worry about opening a demat account and fill the form and do the paper work once more.

When you buy shares in a company, you become a part owner of that company, and the proof of your ownership is the share certificate. However, instead of getting a physical certificate, the shares you buy are stored electronically in your demat account.

After buying shares whenever you wish to sell your shares or make any other changes to your investments, you can do it through your demat account. It’s like having a safe place to keep your investments, and you can access it whenever you need to.

How to open a Demat Account:

Currently the easiest way to open a demat account is to open it through a stock broker. You can also open a demat account without the help of a stock broker too but we suggest doing it through a stock broker as it makes things easier for you. When you register with a stock broker, the stock broker automatically creates a demat account on your behalf so you do not need to worry about it. So when you have finished doing Step 1 you will have both a stock broker account and a demat account.

Step 3: Buying Shares

Once you have finished Step 1 and 2, you will have a stock broker account and a demat account. Now to buy share/stock you need to

1. Login to your stock broker account.
2. Now you need to transfer money to your stock broker, which can be done electronically with most modern stock brokers.
3. Search and select the stock and quantity which you want to buy in the stock broker account.
4. Finish buying your shares
5. Your stock will be debited to your demat account.

I hope this post helped you in learning How to invest in share market and go about buying shares.