SHARE MARKET or still a LEGAL SATTA (BETTING) BAZAAR? Well! I am pretty sure I would have changed your perspective a little with my last blog. Do you remember what the share market is, Don’t you? Do not worry if you do not remember it. I will help you recall it. The share market refers to the market where shares are publicly issued and traded. In simple words, it is a marketplace that assists the two prospective parties to do their transactions and charges from them.
The share market is one of the primary resources of revenues used by individuals or corporations to expand their business entities. It offers long-term investment opportunities to individuals. To business entities, it provides liquidity that enables investors to trade their securities or shares as soon as possible. Various opportunities are waiting for the individuals to invest their money. The individual decides to invest his money by selecting the best option. It is obvious to examine the pros and cons of the different investment platforms. The question is, how to invest?
As a beginner investor, you cannot just walk into the share market and start investing in the shares. There is a procedure that every investor has to follow to invest their money in shares. As a newbie investor, the process of investing and trading in the Indian share market can seem a bit complicated. It requires you to open certain accounts and fulfil a few formalities. Yay! then you are all set to have a thrilling experience in the share market. Let us have a look and know about the process of how to invest in shares in no time.
Being a resident of India, you all must be knowing what an Aadhar card is. Also, everyone knows how much importance it has in almost everything. It is a twelve-digit unique identity number for an individual. It proves the uniqueness of every person based on demographic and biometric information. Aadhar card is a must to open a Demat Account in India as an authentication identity proof. Know Your Customer (KYC) formalities are there to complete that are based on Aadhar card only.
PERMANENT ACCOUNT NUMBER (PAN CARD)
Almost every adult, irrespective of being an investor, is a PAN cardholder. PAN stands for Permanent Account Number, and it is a ten-character alphanumeric issued in the form of a coated card by the Indian Income Tax Department. It is a mandatory requirement for executing any financial transaction in our country. So, the primary thing you will need to buy shares is to have an error-free PAN card.
In today’s time, nearly every eligible person has a bank account. To start investing, you have to make sure that your bank account is linked to your Demat and Trading account. When you buy the shares, your bank account gets a debit amount of money. As a result, your Demat account gets credit with the stocks. On the other hand, when you sell off the shares, your bank account gets credit with the amount you earn against the shares sold. Appropriately, your Demat account is debited with the number of shares. To make either of the transactions happen, get all the statements for smooth functioning.
UIN – UNIQUE IDENTIFICATION NUMBER
Unique Identification Number is the number that is required just when an investor plans to get involved in a single transaction. If this transaction is amounting to INR one lakh or above, you need the UIN. If an investor doesn’t have the UIN, the person won’t be able to do transactions equal to or above INR one lakh.
OPEN A DEMAT AND TRADING ACCOUNT
First, you have to enlist a SEBI registered broker. The next and most vital thing is to open a Demat account and a Trading account. By now, I have mentioned the Demat and Trading account numerous times. You guys must be wondering about what these accounts do in the share market? Let me explain to you how to invest in the share market with Demat and Trading Account.
A Demat account offers the facility of holding your shares and securities in an electronic form. It is similar to Paytm or GooglePay, where your money is in the form of e-money. As the world is getting digital, shares are also not given in physical form anymore. Here, the Demat account comes in the role and holds your shares in the digital contract. It is facilitating the ease of trade for the investors. Whenever you buy or sell shares in the share market, the number of stocks will be credited and debited in and from your Demat account, respectively.
A Trading account facets the exchange of shares and creates the link between your Demat account and your bank. It is somewhat like a savings account that you open in any bank. It lays hold of the shares you have held in your Demat account and vends them in the stock exchange. Your stockbroker performs the whole procedure after opening your Demat and Trading account.
WHERE TO OPEN A DEMAT AND TRADING ACCOUNT:
As everything is getting digital, opening a Demat account is no longer an encumbrance. It just takes a few minutes, and you can have your Demat account ready. As we read earlier, there are few online platforms like Zerodha, Groww, Upstox, Angel Broking and many more. These are the platforms that let you open your account with a few clicks. You always check for the reviews and ratings for the other applications you install on your mobile phones. Am I right? Just like that, you should check their reviews and ratings too before opening a Demat account. Although these are the governmental registered online platforms, still don’t forget to do your research. These applications play the role of a stockbroker, or you can say of an intermediary, through which you can buy and sell your shares.
BUYING AND SELLING OF THE SHARES
For this, you need to tell your enlisted stockbroker the stock name, the entry price and the number of shares that you are willing to buy. For instance, if you want to buy ten shares of Cipla Ltd. It is currently trading at INR 926.00, and you want to buy it at INR 900.00. You can ask your enlisted stockbroker to buy ten shares as soon the price drops down to INR 900.00. Also, for example, you want to sell ten shares of Cipla Ltd at INR 1100.00 shortly. It is currently trading at INR 926.00. You can, in this scenario also, ask your stockbroker to sell the shares once the price reaches the set target of INR 1100.00.
ENLIST WITH A BROKER
The share market is not an ordinary place. Unlike any other market, you cannot intrude and buy shares with cash. There is a need to enlist a broker to enter the Indian share market. The broker will help you in knowing how to invest. The broker will sustenance you in buying shares and for accomplishing every other formality that has to be fulfilled. He serves as the intermediary between the stock exchange and the investor. You can execute the trade in the share market via broker as he facilitates between the buyer and the seller. It is mandatory to open a Demat account with a SEBI registered broker.
You cannot start your investment journey in the share market without a stockbroker. I am sure you guys must be knowing this too now. Surprisingly, there are two types of stockbrokers – DISCOUNT BROKER and FULL-SERVICE BROKER. A few questions may arise: what’s the difference between these two types of brokers? Who is the best for us? To whom should we open our account? All these questions keep wandering in the mind of every newbie investor. Do not worry! We will help you by answering all the questions mentioned above.
DISCOUNT BROKER VS FULL-SERVICE BROKER
DISCOUNT BROKER is a stockbroker who carries out all the transactions of buying and selling the shares at reduced commission rates. They are technology-driven brokers with less operation cost. DISCOUNT BROKER provides the convenience of trading platforms only to investors but no advisory facility. They also offer free online trading software to all investors or customers. The most popular DISCOUNT BROKERS are Zerodha, 5Paisa and Upstox.
Now, if we talk about who are FULL-SERVICE BROKERS? They are the brokers who offer research analysis, trading and advice in stock. You can also get services like commodities, currencies, mutual funds and many more investing instruments. FULL-SERVICE BROKERS function from many offices and branches across the country. An investor or client can visit them if they need to enquire about something. They offer client-dedicated relationship manager, advisory, tailor-made support, portfolio management system and services related to wealth management. The most popular FULL-SERVICE BROKERS are ICICI Direct, Motilal Oswal, Angel Broking and a few more brokers.
HOW TO CONCLUDE THE BROKER YOU WANT TO GO WITH
It is necessary to select the broker that matches your requirements to start your investments in the share market. Here are a few categories that you might fall in. Select your stockbroker wisely.
- You do not have enough funds to invest in the stock market. Of course, you can not manage to spend handsome amounts on fees and commissions.
- Maybe you prefer to do your research work and make your own investment decision.
- You are a quick learner and understand how to use various tools and resources to get discernment. You need to make a smart move with your funds.
If you find yourself in the following categories, then a FULL-SERVICE BROKER is the right choice for you.
AUTHOR’S LAST WORDS
Investing in the share market is intrinsically associated with risk. It is crucial to keep in mind the risks and their consequences on investments. Investors have to keep a frequent check on their investment shares. Not only on the stocks but also the industries and the companies in which they have put their money. Investors can also reduce the risk involved by opting for the investment avenue wisely. One should be diversifying their funds to get a higher rate of interest. Thus, it is the duty of both the prospective parties to build proper and responsible portfolios.
As I mentioned in the earlier blog, only 3.7% of people invest in the Indian share market. It still stands in 7th position with a $2.7 trillion market capitalization in the world. If more people start to invest in the Indian share market, the market might top the list. So what’s stopping you guys? Earlier, interested people might have found the process of how to invest in the market. To enter into the Indian share market is not a strenuous task now as everything has become so easy and handy. You need to fulfil the formalities, and you can start investing and exchange the shares. To get ease in how to invest, you don’t need to do many things. You have to choose the right stockbroker for yourself and get your Demat and Trading account open.
I agree with the fact, investing in the share market can be a time-consuming investment venture. However, every individual needs to realise that it is one of the best investment opportunities one has with them. Perhaps, investment decisions seem to be less complex when you gain experience and learn more about the functioning and working of the market.
Thanks for Reading!!!
Disclaimer: This article is issued for general informational and educational purposes only and does not intend to give investment advice. Any references to an investment’s past or potential performance should not be construed as a recommendation of any specific outcome or profit.
Composed By: Aarushi Jain