rebecca 
The Indian stock market offers numerous opportunities to make significant gains. One should capitalise on market opportunities strategically. Most individuals consider stock market investing which is a long-term process.
Investing in the stock market may seem daunting due to the involved risk and complexity, especially when one is just starting. The investing process is no more complex with demat and trading accounts. An understanding of how to get started can help newbies in managing their funds in the stock market and reap returns. Here is a brief guide to help newbies to strategise stock market investing.
The Perfect Way of Investing
Following are the strategies defining the perfect way of investing in the Indian stock market:
- Understand Different Types of Financial Assets
Understand different types of financial securities that are available in the stock market. The key ones include:
- Equity shares: Companies issue their shares in the primary market via IPOs (Initial Public Offerings) and these shares get listed on stock exchanges in the secondary market. Investors can buy and hold shares in the IPO market or on the stock exchange to gain from capital appreciation and in the form of dividend income, unlike share market trading.
- Equity Mutual Funds: Mutual funds are professionally managed funds where pooled money from numerous investors is invested in different stocks. The profit earned from the investments is distributed between the mutual fund holders in proportion to the number of mutual fund units they hold. The fund manager takes calls on what and when to buy and sell for high returns.
- Exchange Traded Funds (ETFs): ETFs are passively managed funds and increasingly gaining traction considering low-cost investing. They track an index like SENSEX, NIFTY, etc.
- Gauge Financial Stability and Determine Risk Profile
Determining the risk profile before investing is crucial. A risk profile includes an investor’s risk tolerance, capacity, and requirements. Here is the explanation:
- Risk tolerance suggests the degree of risk an investor is willing to take.
- Risk capacity directs how much risk investors can take as per their financial stability.
- Risk requirement means how much risk investors need to take to meet their financial goals.
Determining risk profile helps individuals hold the right assets in a demat account. For example, individuals with a high-risk profile can consider high-risk-high-return assets, like direct equities.
- Set Financial Goals
Investors should define their financial objectives, like funding higher education, business operations, home purchase, retirement, marriage, and more. With well-defined objectives, investors can have clarity on the fund employment at various stages of their lives to reach financial goals. Time frames for investments differ for varied goals. Investors can understand how long one needs to stay invested to reach a defined objective. For investing, individuals should allocate funds for regular investment. Inculcate and maintain investing habits. Slowly increase the contribution towards investments as you gain confidence.
- Build a Diverse Portfolio
Diversification is the basic and important strategy for stock investing. Build an investment portfolio with diverse financial assets and industries to reduce risk. It helps minimise the impact of certain assets in the portfolio performing poorly at a point in time. Also, as investors grow older, their priorities change with time. Their portfolio must also change to align with these priorities. Consider rebalancing the portfolio every couple of months to ensure that it is not over or underexposed to any one asset class.
Thus, get clarity on crucial aspects of stock market investments and at a personal level also to determine a perfect way of investing. Saving on investing costs with a discount broker’s demat services is also a part of perfect stock investing. Consider a trusted discount broker offering digital advisory services for easy investing decisions. Choose from the ready-to-invest stock basket and meet defined financial goals.
