Stocks appeal to us as a high-return investment. That might be true in a way. Because, you may be able to earn much more by investing in stocks if luck is on your side. But investment in stocks comes with considerable risks.
Commenting on the risks of investing in the stock market, the popular author Charles A Jaffe explained : ‘Whales only get harpooned when they come to the surface, and turtles can only move forward when they stick their neck out, but investors face risk no matter what they do.’ So, if you are planning on investing in the stock market don’t plunge headlong into it without acquiring sufficient knowledge about the ‘ins’ and ‘outs’ of the stock market. Here’s a lowdown on how to invest in stocks:
Ideally, you should read a lot about stocks and stock markets before thinking of investing in stocks. Better still, try to take a crash course. That way, you will have some idea about the ‘ins’ and ‘outs’ of the stock market.
Once you are done with that, it is time for some research about your local brokers to zero in on the one you would like to do business with. If possible, pay a visit to the stock exchange to get a hang of its operations and try to check out the reputation of the broker you would like to deal with. Last but not the least, don’t forget to do a google search for reviews on the broker concerned.
Once you have decided on the local broker, you need to open a demat account with the broker and deposit the money you would like to invest in stocks with your broker.
Never invest in a hurry. Make it a habit to carry out fundamental research on the stocks you are interested in buying. Use available analytics to arrive at a sensible decision. Once you decide to buy some stock, decide on how many shares you want to buy at a given price. Log into your account, fill in the details and hit the ‘Buy’ button.
You have just become an investor in the stock market. Keep abreast of the swings in the stock market particularly in volatile situations. Buy and sell stocks at the opportune moment to get optimum returns on your investments.
Finally, review your portfolio on a monthly basis as frequently as you can. It pays to be alert to the goings on in the stock market. As I said earlier, the stock market is fraught with risks. What you need to learn is to take calculated risks. More about that later…
