How to Buy Shares
The stock market is a good avenue for investment, but there are risks involved. You must know your financial needs, wants, and risk-taking capacity before venturing into the stock market. Once you have done your research and have picked suitable companies to invest in, you need to buy the shares. When you pick shares, you barely make money off trends and rallies that are not foreseen or understood. But when you pick companies, there are anticipated profits and fewer risks.
So that brings us to, how do you buy shares?
Keep reading to find out how to buy shares online in India. This quick read also explains how to buy shares for beginners.
Steps on buying shares
Back in the day, when the internet wasn’t a thing, the stock market was an offline place. Although we have offices for the National Stock Exchange and the Bombay Stock Exchange, most of the trading happens online. Various online brokerage houses facilitate quick and secure activities in the stock market daily.
In this article, we tell you how to buy and sell shares online.
But first, let us understand how investors purchased shares offline before the internet offered faster and safer methods.
Now, shares have been purchased and sold for over 300 years. Earlier, if you wanted to buy a share, you would have to make a telephone call or visit your broker’s office. Moreover, shares would be physical documents of certifications affirming that you had indeed bought shares. These would be sent via post and would sometimes take months to arrive.
Nowadays, you can pull all the tricks of the stock market online, including shorting, margin buying, and more.
Here’s how to buy shares online in India.
1) Find the right online broker app:
There are many that you can pick from. However, with most brokerage apps there are hidden charges, which can trickle into your profits. To make the most of your stock market acumen, you need to start with choosing the right broker.
TradeSmart is an all-in-one online platform that helps you choose the right plan based on whether you are going to invest or trade. All you have to do is register your Demat account with your TradeSmart profile.
This brings us to the next point.
2) Get a Demat account:
A Demat or Dematerialised account is your compulsory requirement for online stock market proceedings. To start your Demat account, you need:
- PAN details
- Identity proof
- Address proof
- Cancelled cheque
Once you have submitted these, your credentials will be processed and verified. TradeSmart cuts down the processing time to within 24 hours if you don’t already have a Demat.
3) Place orders:
Once your Demat is up and running, you can see your positions and holdings, and also purchase shares listed on the NSE and BSE. You can pick the shares you want to purchase. You can purchase at the market price or you can set a price of your choice. When the number of shares you have demanded is available at the price you have entered, the transaction is complete and the shares get transferred to your account in T+2 days.
Now that you know how to buy shares, let’s look at what shares to buy.
Before you invest your hard-earned savings in the stock market, you have to take care of a few things.
Understand how to read a stock chart:
The stock chart of a share can help you see how the share has performed over its lifetime. It can give you an idea of when it peaked and when it suddenly declined. By relating this information with relevant news and developments can help you understand how to time your share market investments.
Choose your shares carefully
The share market has over 7,500 listed shares. We can’t go buying them all. Most investors stick to purchasing NIFTY 50. However, not many of them know that NIFTY 50 is just a term given to the 50 most traded equities on the NSE. However, this in no way signifies a strong company or a long-term value-generating model. Do your research and do not be afraid to invest in small-caps or mid-caps. Always read up about the company you want to invest in. Only invest in companies that you understand and can vouch for.
You know how they say Rome wasn’t built in a day, and so it is true for the share market as well. Even the best companies may hit a bear period where they just do not appreciate in share price. This does not mean the company is bad or you should get rid of that share. Being patient in the stock market always pays off in the long run.
A lot of experts in the market will tell you to learn how to time the market. However, this exercise is futile because no one anywhere is capable of precisely timing any slump or rise. While we cannot time the market, we can inculcate a financial discipline and be regular with our stock market investments.
Appreciate small wins
It is OK to start humble and slow. Remember that you can also lose a lot of money in the stock market, and this is why you should only invest the surplus money you have at any point.
Do you need a Demat account compulsorily?
Yes, to participate in the stock market one must have a Demat account.
Are share market investments safe?
The stock market is volatile, but investing in companies that are profitable and sustainable pays.
How are stocks bought?
You have to place an order on your online brokerage app. Once the share reaches your desired price and is available in the desired quantity that you have entered, it gets bought.