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6 Things a New Stock Investor Needs To Know

IndianMoney.com Research Team | Updated On Tuesday, February 09,2016, 01:25 PM
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6 Things a New Stock Investor Needs To Know

 

An investment in stocks gives great returns, or so you have heard. You have also heard horror stories from your friends, who have lost big money in stocks. You want to invest in stocks, but you are afraid. What if you lose money in the stock markets?

Investing in the stock markets is not rocket science. All you have to do, is follow these tips and soon you will be a good investor in the stock markets.

You need to open a demat and trading account

The first thing you need to do to become an investor in the stock market, is open a demat and a trading account. You can open a demat account and a trading account, with a bank or a stock broker. The stocks you buy are stored in a demat account. You can buy and sell stocks using your trading account.

Use an online trading account

If you have an online trading account, you can buy and sell stocks by transacting online, or even over the phone. You can track your trade’s real time, using your online trading account. You must never let your stock broker, trade on your behalf. You must be the only person with access to your online trading account.

Never take your stock broker's advice at face value

Your stock broker will ask you to buy certain stocks. He tells you…don’t worry… This stock will give you 20% or 30% returns in a month. You need to ask yourself a simple question. How does your stock broker know this? Is he investing his money in these stocks?

You can never take your stock broker's advice at face value. You need to understand that for your stock broker, your needs are not very important. His needs are important. Your stock broker earns commission on stock  recommendations and new accounts opened. He is a seller, not an advisor.

Keep a record of your investment

You buy or sell a stock. This is called a trade. Every time you trade (buy or sell a stock), your stock broker sends you a contract note. This contract note is proof of your trade. You must verify your trades and store them online.

You must store the price at which you buy your stocks and sell your stocks, as well as the date on which you buy and sell your stocks, on an excel sheet.This will force you to be serious in your stock investment, as well as pay your taxes in time.

Buy small quantities of stocks

You need to remember that you are not Warren Buffett. You need time to learn the ropes.  Start small, until you understand how the stock market works. Invest small sums of money, even if you have a large amount of money to invest in the stock market. After you become an experienced investor and have confidence in your ability to invest in stocks, you can buy stocks in larger quantities.

Invest in knowledge

You can never be a successful investor in stocks, unless you learn about stocks and the stock markets. If you invest in knowledge, it is likely that you will never burn your fingers in the stock market.Read good books, ebooks and newsletters, on how to be a good investor in stocks. Learn from the stock gurus and be a good investor in stocks.

Now enough of the lecture. Time to jump into stocks.

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IndianMoney.com Research Team

The research team at IndianMoney.com comprises of certified and experienced professionals who share the company's vision to make every Indian financially literate by equipping every Indian with right and unbiased advice. IndianMoney.com research team provides newsletters, articles, videos and FAQs on various financial products and concepts only to help you make wise financial decisions.

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