It is very interesting to invest in shares, though most of the people would like to start with small money.
First of all, you need to know a little bit in detail about the stock market, then about the shares and the mode of their trading. What are the risks involved and how to be smart in dealing with shares?
- Stock Market – It is the place where the shares of listed companies are bought and sold. In India, you have BSE and NSE as two big stock exchanges.
- Shares are bought and sold by you and me only through approved brokers.
- Approved brokers are mostly banks like the ICICI, HDFC, IDBI, UTI Bank, SHCI, are to name a few.
- First you need to open an account with a bank, that has the Demat account facility.
- Go to the respective bank and open a Savings account with deposit of around Rs. 10,000.
- Tell the bank that you want to deal in shares and ask them to open a Demat account. It will be done automatically after signing a few forms.
- A Demat account is nothing, but the account where the shares bought by you will be kept separately.
- Only you could operate that account online, through Internet.
- You could open the online facility offered by the ICICI, HDFC or ShareKhan or others and buy shares you wish and decide the quantity and the price.
- Here the bank will act as a broker. You online order for purchase would be carried out by the bank. They charge broker commission, much less compared to private brokers.
- It is very important for you to have enough balance to your credit in your savings account.
- As and when you buy on line, your Demat account will be credited with those shares. The money for the purchase will be automatically deducted from your account by the bank.
- You also have to keep looking for opportunities to sell the shares that you have already bought and kept in your Demat account.
- For buying and selling, it is necessary to familiarize which shares to be bought at what prices and sell them at what price.
- As and when you decide to sell (depending on the price quoted in the market) you could sell them through online trading system.
- The moment you sell your Demat account will be debited with the number of shares sold by you.
- Your account will be credited with the amount for which you have sold.
- Depending on the amount of profit earned, tax will also be deducted by the bank (TDS). The bank will give you a TDS certificate by the year end, i.e., March 31, of that year which you could attach with the return to justify the tax payment.
- When the shares could be bought or sold?
Always sell the shares when the price is up and buy when the price is down. Everybody had to adapt to this formula.
- What profit should it give you?
You buy a share for a particular price. Take the amount as investment. Any bank will lend you at ten per cent interest. It will give you 24 per cent return if the share price rises in such a way. Do not wait for the market to crash and start searching for buyers for the price you quote.
After selling, never look back and repent for what profit you have earned, you had delayed the sale. Be happy that it did not happen otherwise. This is the best way, to sell.
- If you want to buy, look for 52 week low, look for the peer companies, their price and compare it with the company you want to buy.
Look for the prospectus, future plans and the profit the company ought to make in the next year. Take the perception or a change and buy.
- You cannot take profit in the buys. Losses do occur as long as you are at decent surplus for which you have no reason to be unhappy.