Posted By : Balaji Rao
Are there any books that teach you how to swim? Are there any books that teach you how to use a smartphone? Should there be a book that teaches you how to buy/sell stocks in the stock market? This question is very frivolous. What’s there to teach about buying / selling stocks? Who taught your parents or grandparents to invest in gold/silver, real estate/properties and the likes? Did they read any book? Did they sit in any classroom? No, all they used was common sense approach that the prices that will have a natural demand would rise in the future so buy today and sit on it for a long time and reap the benefits.
First thing about buying stocks is to just buy, that’s it. Open an account with a stockbroker without going around checking which stockbroker is good, bad or ugly. You can use the services of stockbroker just as a platform to avail the basic services and for this you don’t need to do intense research. And use a bit of common sense to see if the name of the stockbroker is already a name that is commonly known in the market such as Karvy, Kotak, Motilal Oswal, Geojit, JM, Anand Rathi and the likes who are quite famous and renowned having been in this business for a very long time and are time tested brands.
Once the account is opened after the basic documentation such as providing copies of PAN and Aadhaar, photographs and bank details and signing a member-client agreement, you are ready to start. Now you have a demat account that holds or maintains your shares incoming and outgoing based on your type of transactions in the future and a trading account that lets you to speculate and/or invest.
The question that bothers you now is how to begin and whom to ask how to start your transaction. I will not talk about speculation which I do not endorse but will definitely discuss about simple investing techniques. Let’s again use a bit of common sense; why do we invest, we invest because we want to deploy our savings into such opportunities that fetches profits at a future date that enables us to meet events and aspirations of our life. So, when you have opened your broking account it’s time that you buy stocks that offers such capital gain opportunities.
First start with conservative investing approach; let’s consider a few stocks – ITC, Ambuja Cement, L&T, Infosys, Cipla, SBI, NTPC, Indian Oil, Tata Steel, Tata Motors, Asian Paints, Reliance Inds, HUL among others; haven’t you heard of these companies in your life? Haven’t you used their products yourself or seen others using the products manufactured by them? Of course, you have. Then doesn’t it make sense to buy the stocks of these companies whose sales are visible?
Now, don’t start worrying about the price of these stocks that these seem expensive; you are behaving like a typical homemaker who worries too much when the prices of onions go up. The stocks mentioned above are priced high because they deserve to command such high prices because of their background and reputation. Remember, intention to invest is more important and not the price of a stock when you are a beginner, choosing the right stock at the right price will naturally come to you when you mature in the days to come.
Imagine you are to begin to learn swimming, if you worry that some water will get into your nose or ears will you ever jump into the pool? So, be prepared to the organic process of falling and learning. Losses are part of every venture. All you could do is buy one or two quantity of shares of a few companies; its okay, don’t fret that you are buying only one or two shares, you have to make a beginning and you are using your common sense of testing the waters. Just buy, pay the money to the broker (he does not mind about the quantity you buy) and get the shares into y0ur demat account and enjoy the ownership of the companies you have purchased. You would be in due course eligible to receive dividends, bonuses and so on including high chance of capital appreciation.
And now again don’t bother if the price of the companies you have purchased falls in the near term. Remember that for stock prices to climb up the companies have to make ample profits which will take time and wait with patience which is the key hallmark of a successful investor.
Start small, even with just Rs.5000 buying small quantities and get used to the process of investing and over time you will mature. Then start reading or going through business newspapers at least for 30 mins every day. Within a few months you would have acquired decent knowledge. Parallelly you can enrol for a training course with any reputed stock market institute in your city and add to your knowledge.
Best way to learn is not through a book alone, but through application; you may miss out initially but practice is what takes you to perfection.