In the Indian tradition, there is an interesting Sanskrit expression called Shubhasya Shighram. To put it simply, it means that one should start an auspicious initiative or venture as soon as possible. Earning money and creating a financially secure existence are two key elements make our life auspicious. Understandably, great investors believe in this philosophy. Warren Buffett, arguably the smartest investor of the modern times, began investing at an impressionable age of eleven. He bought three shares of Cities Service. Such an early start has made Buffet one of the most sought-after investment gurus in the investment world. It is a lesson for those who have not begun investing. Often, those potential investors who have not begun investing ask: When and How to start investing in the stock market? It is like asking: when and how should one start living? And the answer is NOW. There is no better and greater day than today to start investing in stock market. The earlier you start investing in stocks better it is for you. Let us understand why you should start investing in stock market early:
Before one starts investing there are two things a person needs to address. First: Pay off all your high -cost loans such as credit card debt or personal loans. Second: Create an emergency fund to meet a financial emergency such as loss of job. The emergency fund should be equal to six months of expenses at least, say experts.
A key thing to understand is investing in stocks is akin to owning businesses. Longer you own quality businesses, more you benefit from the long term compounding. When you start investing in stock early, you can allow it to compound for longer.
Here’s a guide on how to invest in the Stock Market:
Prepare a planned approach
A planned approach to investing in stocks can help you achieve your financial goals. Decide to save a fixed sum each month out of your earnings and keep it aside. Over a period of time these savings act as a pool of capital.
Building Capital
When you are preparing to build your capital, you can start paper investing. You can use some of the simulators available in the market. These simulators allow you to invest in stocks of your choice with virtual money. This helps you to assess your investment decisions as you incur notional loss and gains.
Open an online Trading or Demat Account
You can open demat account and a trading account with a stock broker to start your investment journey. Choose a reputed brokerage firm which offers a good investment platform and competitive brokerage.
Invest for long term
Invest those funds that you do not need in the near future. Though the stock market rewards investors in the long term, in the short term, they are volatile. Hence, invest with the long term vision. Start small while investing in stocks. Though it limits your upside, it also helps you to contain losses just in case you go wrong on your investments.
Though equities take time to reward investors, it makes sense to stay invested and keep investing as you go along. This is because in the long run, being disciplined helps you to accumulate shares of good companies and create wealth.