INSUBCONTINENT EXCLUSIVE:
Share Market Today: A sound strategy tells you what to buy, and when to buy and sellYou wish to test the stock market waters
You are haunted by prolonged indecision and self-doubt
You are intimidated by the complexities in the markets
Does this resemble you? Peter Lynch, the legendary stock investor, has some re-assuring words: 'Everyone has the brainpower to follow the
If you made it through fifth-grade math, you can do it.' If you are willing to put in the time and effort, stock market investing can be a
rewarding experience.According to Sandip Sabharwal, Investment Adviser, new entrants into the stock markets can take two routes
They can either go with established equity mutual fund schemes or buy bluechip stocks in a staggered manner, for example, if they want to
deploy Rs one lakh they can buy 10 bluechips for Rs 10,000 each and keep buying them periodically
In case they want to take a greater risk and invest in a broader portfolio, its best to rely on professional advice
Stock market investing is not a monthly income plan and one should be prepared for a 10-15% downside in case of particular events, he
added.Start Early"The journey of a thousand miles begins with the first step," said the Chinese philosopher Lao-Tzu
The sooner you take the first step in your investing journey, the richer you will get
Starting early gives money more time to get compounded as compounding is most successful over a period of time
For example, a person who starts investing at the age of 25 and invests till the retirement age of 60 would have invested for 35 years,
whereas someone who starts at 30 would be invested for only 30 years.Open Investing AccountYou need a trading/brokerage account and a demat
account (short for 'dematerialized account') to start investing in the stock market
The trading account facilitates the purchase and sale of shares listed on the NSE and BSE, while the demat account holds the purchased
shares in an electronic format
There are many brokerages and banks providing brokerage and demat services today
The accounts come in two variants, viz
In an offline account, the share purchase and sell orders are placed with the broker over the phone
Online accounts are becoming popular as you can place the orders yourself (with a login ID and password) with a mere click of the
button.Start Small"Great things are not done by impulse, but by a series of small things brought together," said the great
Start putting in a small amount of money and before you know it, you would accumulate a decent corpus under your belt
Moreover, it is better to commit smaller sums of money during the initial learning process and increase the allocation with experience and
time.Have a PlanA newbie investor will face the inevitable question: what to invest and when to invest? The basic dictum of investing is to
A sound strategy tells you what to buy, and when to buy and sell; and learning fundamental analysis and technical analysis will help in
Fundamental analysis evaluates shares by looking at a company's parameters such as business model, balance sheet and quality of
management, while technical analysis studies a stock's historical price and volume to make future projections
Reading investing classics such as 'One Up on Wall Street' by Peter Lynch and 'The Intelligent Investor' by Benjamin Graham would also go a
long way in honing investing skills
A good idea is to invest in companies that you are already familiar with and subsequently look at other companies and sectors.Decide on the
Time HorizonInvestors have different time horizons for holding shares
Intra-day players trade in the market with the aim of exiting their positions by the end of the day, short-term participants have a
time-horizon from a day to a year, while long-term investors look at a minimum of one year and longer
The advantage of long-term investing is that you have to choose a great company at a reasonable price and allow its share price to rise over
Determining one's time horizon is absolutely essential before taking a plunge into the markets.Decide on Market TypeNew investors should
have clarity on whether they wish to invest in the primary market or in the secondary market
In the primary market, companies issue shares through an initial public offering (IPO) from time to time to raise funds for their capital
The IPO investors buy shares directly from the company with the hope of getting shares at reasonable valuations and making good returns post
In the secondary market, the listed shares are bought and sold by the investing community
Some investors may invest in primary issues alone due to the lower pre-IPO prices, whereas others may prefer the broader secondary
markets.At the end of the day, investing should be based on sound strategy, realistic expectations, loads of discipline and sound money
