You have decided to invest. Good for you. Read further about what you have to do next.
8 Tips For a Fresher To Invest In Stocks:
1. Listen to Impartial Advice:
There are many people out there who want to advice you but only a few of them are well-meaning. The rest of them are commission based and are like Lady Macbeth who “hides poison while pretending to be nectar sweet”. Those who advise for your well being might themselves be misguided, hence it’s better for you to check and find out for yourself. Only you can do it, none else can do it for you.
2. Consult Financial Advisers Who Aren’t Biased:
A Financial Adviser or a Financial Consultant should not be biased towards any particular product. Consult only such financial advisers. For that, you have to do your own research on different options based on your needs and then listen to a number of financial advisers so that you get a brief idea of things.
3. Keep Three Kinds of Accounts:
In India, to Invest in Stock Markets, you require three types of accounts:-
a) Trading Account:
An account that is similar to a bank account has to be opened with a stock exchange registered stockbroker. This account is for buying and selling shares.
b) Demat Account:
This is an account where shares are held in a dematerialized form. This account is for transferring shares when you buy or sell shares through your trading account.
c) Bank Account:
You have to link your regular savings account to your trading account. The bank account will transfer money as and when you buy or sell shares through your trading account.
4. Have a Permanent Account Number (PAN) Card:
Not only is this a primary necessity for entering financial transactions in India but also is a unique 10 digit Alpha-Numeric number allocated to someone by Tax Authorities for estimating their tax liabilities.
5. A Broker is Required:
Directly visiting the stock exchange and purchasing or selling stocks/shares is impossible. A broker is imperative as he/she is authorized to buy/sell in the markets. A broker could either be an individual or a company or even online agencies licensed by Securities and Exchanges Board of India.
6. Investing Large Amounts, Get Unique Identification Number:
If you wish to invest large amounts like Rs 1 Crore or more, you require UIN or Unique Identification Number. Even if you want to go to big markets, you will require Unique Identification Number (UIN).
7. Don’t Borrow For Investing:
It is a catastrophic blunder to borrow money in order to invest! The interest you get will be lower than the interest you have to pay to repay the debt! A slight loss will give you dual loss as you nevertheless have to repay the loan.
8. Hold a Diversified Portfolio:
By having a diversified portfolio, you can reduce the risk involved with the stock trading. You can hold stocks in different companies so that even if one is failing, the other would be doing fine.
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