- 1 The Dummies’ Guide to How to Invest in Share Market
- 1.1 STEP BY STEP PROCESS TO INVEST IN STOCK MARKET
- 1.2 Documentation to Invest in Stock Market in India
- 1.3 Contact Stock Broker
- 1.4 Process of Getting a Demant and Trading Account
- 1.5 Getting Along with Some Important Investing & Trading Books
- 1.6 Understanding & Implementing Your Strategy
- 1.7 What to Expect from Stock Market
- 1.8 Over To You
In the recent past, this is the most frequent and common question that I have been getting from my readers. And I have decided to write an article on how to invest in stock market.
How to Invest in Share Market is the Answer to Financial Freedom if done in the right way.
What is your relationship with money?
What are you spending your money on?
The above two questions have made more people take their finance seriously than anything else in my entire blog. If you do not know anything about the stock market and you are looking to start this right from the beginning then you have come to the right place. I am going to tell you the Step by step process on how to invest in the stock market in India.
Certain brokers might ask fewer formalities or documents but none of them will ask more than what is mentioned here. Nevertheless, only if I fail to update the recent changes that might have taken place.
STEP BY STEP PROCESS TO INVEST IN STOCK MARKET
Documentation to Invest in Stock Market in India
SEBI has regulated the document submissions where all your documents should have the matching details.
Some of the most back documents required are as below:
- Pan Card
- Identify Proof
- Bank Statement
- Cancelled Cheque
Now based on which type of entity you are applying the documentation changes. The entity could be one of the mentioned below
- Partnership Firm
PAN, Address Proof, Canceled Cheque, Passport Size Photos.
Along with the above documentation that would also ask for Income Proof if you require trading in derivatives. Which we are not going to cover in this post.
For Partnership Firm, HUF and Limited Liability Partnership
Most of the documentation is the same for both the companies expect that for Partnership have partners and their respective documentation. Likewise, limited liability has directors.
- Application Form of respective Broker
- Copy of AOA, MOA or Partnership Deed
- Pan Card Copy
- All the Partners / Directors / Kartha (Self Attested)
- Companies Pan Card
- Address Proof Copy
- All the Partners / Directors / Kartha (Self Attested)
- Address Proof of Company
- Income Proof
- Proof of Bank Account (Cancelled Cheque Leaf should be with Name Printed/ Bank Passbook)
- Copy of Balance Sheet of the Firm for last 2 Financial years, along with net worth certificate from the CA
- Aadhaar of the Authorized Person as per the Letter of Authority
- List of All Partners’ / Directors / Kartha photos with signatures on letterhead of the Firm
- List of Authorized Signatories.
- Copy of Certificate of Registration
- Share Holding Pattern (Only for LLP)
- FATCA Declaration (Only for LLP & Partnership)
Some of the brokers charge account opening charges somewhere around Rs. 300 to Rs. 400. Once you have the documents ready the amount details could be got from the broker.
Tip: Most stockbrokers negotiate especially the traditional ones. One should consider transferring a lump sum amount even if you are not looking to invest the entire amount into stock. This is for the purpose of negotiating your brokerages. Later always you can withdraw the amount.
Contact Stock Broker
Once you have the documents ready and when you share it with the broker they usually assist you in ensuring that all the documentation is completed. Once the documents are delivered you get a final confirmation from the broker about documentation.
But before selecting a broker and finalizing one should understand what is it that you are looking for. Do you want to invest in stock market? Or do you want to trade in the stock market? If you are looking to do trading then are you going to do intraday trading or positional trading?
Some of the features that you should look for in a Broker before finalizing a broker.
- Limits on FD
- Charting Tools
- Terminal Charges
- Trading Platform
- Mobile Trading Platform
- Dashboard and Reporting
- Access to Invest in Mutual Funds
- Desktop Trading Application
- Their Partner Products
- Brokerage Charges
Based on all the above details to start to invest shares in India or trade in the stock market you would be able to decide if you require a discount broker or a traditional broker.
Tip: If you are looking to open a trading account ask for limit facilities on Fixed Deposit and against ETF’s.
Process of Getting a Demant and Trading Account
Once you have decided on the Broker you would be required to have a Demat account and trading account.
Once you have selected the broker now you would have had a demat account. Demant account is otherwise dematerialized account for holding all your stocks in electronic form. These stock would then reflect in your account after purchase. The total share bought and sold will form your portfolio. The earlier stock was traded over the counter even before the stock exchanges were modernized.
Postmodernization of the stock exchange all has been maintained in electronic form.
Once you have bought the stock from your broker would then transfer the stock to your demat account. You can see the stocks you are holding and you are also entitled to receive a stock holding summary on a regular basis. During your entire holding period, all the stocks would be maintained in the demat form. When you sell your stock they are transferred from your demat account by the broker to the exchange to be transferred to the buyer.
The transaction is usually carried out in your trading account. Trading account facilitates buying and selling which are transferred from your trading account to the exchange. Once you submit all the documents to the stockbroker you can ask him to open a trading account and a demant account.
The advent of Discount Broking in India like Zerodha has not only lead to saving money but also give many tools and features. Zero Brokerage on investing and lowest possible brokerage can be availed Click Here and get a call back.
Getting Along with Some Important Investing & Trading Books
Majority of trader including investor and trader at alpha trading started to look out for the well after the fire had broken.
It is not avoidable to stop burning your hands in the stock market but reading before investing is like keeping the well ready. It is always better to prevent than to cure.
One of the most important steps in how to invest in the stock market is to read, read, & read. This is a very interesting source for some Amazing Investing Books for trading and investing.
Some of the best investing books would be regularly be updated here.
Understanding & Implementing Your Strategy
Investing and Trading is a long-term Wealth creating strategy.
If you are having a disillusioned focus on getting rich quickly or making a quick buck. Then surviving for long is really questionable. There are various tools such as Fundamental Stock Screener for Investing and Technical Stock Screener for Stock trading. Technical analysis is a technique of predicting stocks with the help of charts to make money in the stock market.
Having selected a stock trading or investing strategy one should definitely have full confidence in their strategy and stick on to it. At the same time, it is important to review endlessly to create your own winning trading strategy.
Buying and Selling can be either done with the help of stock trading terminal which most stock brokers provide these days. Otherwise, with a traditional stockbroker, one could give a call and ask the broker to execute your order.
What to Expect from Stock Market
Performance tracking and maximization of performance is the key to stock market success.
Most people start with Paper Trading maintaining their own journal and analysis their strategy before starting out to invest in stock market.
Having a reasonable expectation is more important while starting out in the stock market. Most investors are fascinated by money making and pound on only to realize they were wrong.
Creating a strategy is as important as having the discipline to follow your strategy. Before narrowing down to your strategy one should always gain confidence by paper trading. It is important that you do not follow others and get influenced by their trades. Conservative investing or trading goes a long way. Especially at an early stage when your learning curve is in the growth stage.
Learning about different types of investment options such as ETF’s, Debt, Bonds, Debentures, Mutual Funds, Options Trading, Stock Trading, Currency Options, Forex, Derivative trading and Stock Investments.
Most important early advice is to go with the trend by participating in the stock market. Don’t try to beat the stock market or take revenge on the stock market. Because the stock market is always right.
Over To You
If you have reached till here then I want to congratulate you on your new beginning.
When most of us started out at AlphaTrading there was no one to guide us in such a detailed manner. This entire process which now can be done in few days and completely transparent. This was not the case earlier.
Believe you me after the effort we have put in detailing out every little thing in the above post so that you don’t make the mistake that we had made when we started out.
We would feel happy if you share this article and comment on how it benefited you.