Buying shares in the digital age is as simple as ABC. It’s not the buying that can feel challenging; it’s the research that goes into which stock you should buy. Plus, throw some technical terms into the mix, and you have a perfect recipe to overwhelm investors.
In this article, you’ll learn about the process involved in buying shares so you can go ahead and purchase your first stock. The process involves three steps:
- Choose a broker
- Conduct research
- Decide how many shares to buy
1. Choose a broker
The first step towards buying stock is to open a Demat account with a reliable, SEBI-registered broker like Upstox. Online brokerages like Upstox charge discounted brokerage on Stocks, Mutual Funds, Digital Gold, IPOs, and NFOs.
Once you have chosen a broker, initiate the process of opening an account. The broker will require a list of documents to open a Demat account such as your PAN card, Aadhaar card, and other documents.
When the process is completed, the broker will inform you that your account is now open, and you can begin buying shares.
2. Conduct research
Now that you have your Demat account set up, it’s time to figure out which shares you want to buy. You should always invest in stocks that are fundamentally strong. When you invest in a stock, you’re effectively investing in the business. The fundamental strength of that business determines how well the stock will perform over the long term.
In addition to researching and understanding the company’s fundamentals, you should also consider its valuation. You may use valuation multiples like the price-to-earnings (P/E) ratio of the company. Compare the P/E of the company with that of its peer companies or the industry as a whole. This should help you understand if the stock is under or overvalued, and whether it’s a good time to invest.
3. Decide how many shares to buy
Once you’ve identified the shares you want to buy, it’s almost time to head over to Stocks on Upstox. But first, decide how many shares you wish to buy. As a beginner, it’s best to start slow.
Don’t put all your money in one stock that you believe will perform well. Instead, aim to diversify. Put a portion of your money in several fundamentally-strong stocks. If one of those companies goes through a rough patch, it won’t affect your entire portfolio as it's well-diversified.
Another good reason to start slow is so you can test the waters before you go all in. The Indian Stock Market often goes through volatile phases. You’ll need the mental fortitude to power through such phases without panicking and selling the stock.
Wrapping up!
Buying shares isn’t as difficult as it sounds. And, finding yourself a broker that offers a good platform for executing transactions and excellent customer support can help make your journey a success.