Investing in stock market can be challenging you do not focus on technical aspects of the volatile stock market and do not evolve with the evolving market trends.
If you are someone who is willing to start his investment journey but confused about where to start from and which resources to follow to have an understanding of how stock markets work and evolve.
To start with your investment journey it is essential to choose a perfect strategy based on your financial capability and personal financial goals. People generally choose to start investments in stocks and mutual funds to have a secondary source of income and live a more luxurious life.
How to Start Investing in Stock market?
It is true that investment in the stock market can lead you to live a lavish life but at the same time it has some repercussions as well like succumbing to heavy loses by not being disciplined enough in your investment cycle and not taking proper care of the risks involved with stock market investments.
Start investing at an early age
It is always best to start your investing journey from a very early age because by the time you grow your money also grows automatically with the compounding effect. When someone begins investing, the very first question that comes to their mind is, if they can start investments with a little money that they could save from their salary. So the answer to this question is Yes, they can start their investment journey with whatever they could afford.
Nowadays we have access to the stock broker applications on our mobile phones that enables us to buy even fractions of shares or could invest in mutual funds starting as low as 500 rupees a month.
Decide your Investment Amount
To begin with, you need to have at least some amount in your mind that you are ready to invest and you should be able to invest that amount without worrying about withdrawing it soon. You must plan for investments that could last long to give you a better return on your investments. Your investment portfolio will gradually increase based on the monthly amount that you are ready to invest.
The most common goals in investing are becoming financially independent at an early age or enjoying life to the fullest after retirement. A general rule of thumb that says you should invest at least 10-15% of your yearly income to get a better return till you retire from your work and other responsibilities.
Before starting investment with any amount, you should first retrospect on your available income sources, and then save at least 20-25% of your income for the emergency fund. Set out some more amount for high interest debts and loans, if you have any. At last create a monthly budget for your daily needs and investment needs.
By this way you can easily plan for your expenses and decide your investment amount very easily, with any stress.
Always remember investing is a marathon, not a sprint, so do not expect big gains on the very first day, you need to invest both time and money to understand the process of generating consistent income from your investment portfolio.
Evaluate your Risk bearing capability
Investing in stock markets and commodities markets is a risky game and you should be able to bear losses and expect gains to a certain limit. Never put all the eggs in one basket, try to diversify your portfolio with multiple types of stocks and mutual funds such as small cap, mid cap , large cap.
Your investment portfolio should have something from all the three sizes of capital markets.
It is essential to self assess your risk bearing capacity, to take bold decisions for your investments. Risk potential also depends on your time horizon or the duration of your investment in a particular fund or stock.
Access your finances well in advance including your emergency fund, daily expenses fund, utility bills and other important expenses. Based on your income and all the combined expenses, you need to create a budget for your investments upon which you are ready to take risks and generate wealth to fulfill your dreams.Â
The next part is to align your investment money with the levels of risk associated with it. For example lower risk options like stocks and bonds, moderate risk funds like Mid- cap, large cap stocks, index funds etc. and high risk funds like small cap, sectoral funds etc.
Your Investing Style matters a lot
Determining your investing style is crucial to understand to explore your ways of generating more income through strategic decision making for your planned approach towards creating an investment portfolio. Some people prefer to invest money for a smaller duration in more liquid assets while other people plan for long term investment options that suit their style of investing. Some people feel they have a personal coach or a portfolio manager who can guide them at every step which stocks to buy and which stocks to sell at a particular point of time. These stock market professionals provide guidance as per their years of experience in handling different stocks and mutual funds.
Choose and Open an investment accountÂ
At the end you need to identify and pick the best stock broker app or connect with a broker to start your investing journey, you can choose from various stock broking apps like Groww, Zerodha etc. you need to think about the type of account you want to choose, this can greatly impact your tax liability, you should always try to invest in those stocks or mutual funds which can give you stability and relaxation from heavy taxes. There are different types of investing accounts such as taxable account, tax-deferred account, and tax free account.
Conclusion
You need to thoroughly study all the important aspects of investing before you start anything blindly. There are some core concepts and methods which you must follow in order to become a successful trader or an investor. However there is no minimum requirement of investment to start investing in stock markets, you can start with as low as rupees 500 and go up to any amount.
For more tips related to stock market and trading, follow investmentGroww and stay ahead of the trends. Have a great and happy investment journey.
