How To Start Buying Shares - Make Money From The Stock Market.

One can potentially improve his /her financial portfolio by investing in shares but you must understand how the market operates. Beginners must know how to start buying shares and then enter the market. 

One must understand the risk involved in the stock market. Also, there are certain steps one needs to perform before starting to invest in shares. To understand how to start buying shares, one must understand how to set clear investment goals, determine your risk handling capacity, select the right broker for yourself, etc. Here is everything you need to know before you start investing in shares.

How To Start Buying Shares? Complete Guide 

Beginners must focus on understanding the stock market because the stock market is full of uncertainties. If you follow and understand each step stated below you can invest and earn exponentially. 

Step 1 - Set Clear Investment Goals 

The very first step is to set clear investment objectives. With clear goals, you will stay focused and it will strengthen your decision-making skills. 

One might have short-term goals such as buying a home or long-term goals like saving for long-term objectives like saving for a comfortable retirement. Young investors must focus more on growth and long-term wealth accumulation while the investors closer to retirement focus on safe investment and capital preservation. The clearer you are with your goals the better is your decision making. 

How do you set investment goals? 

To set clear investment goals one must understand the following points. 

1. Be precise about your goals:- You should not set vague goals like ‘save for retirement’ and set clear aims like “accumulate $5,000,000 in your retirement funds by the age of 50.”

1. Determine the investment horizon:- One must understand the time they have to achieve each goal. In case the goal is long term you have more time horizon to achieve your goals. The strategies for the long term can be more aggressive while in the short, term you must have conservative approaches. 

1. Evaluate your finances: One must be realistic while evaluating his finances considering their savings, regular income, and passive sources of income. 

1. Rank your goals: People tend to make the mistake of balancing several goals at once, but the right way is to prioritize your goals. 

Step 2: Determine The Amount You Can Invest 

Having a clear-eyed assessment of your finances is crucial if you want to invest in the share market. You must follow this step because it will make you a responsible investor. 

How to determine your investment amount? 

1. Understand your income sources: Start by listing all your income sources. Understand your passive and active sources of income. 

1. Create a contingency or emergency fund:  You must have a solid foundation before investing. Solid doesn't mean perfect, it means enough preparation for the uncertainty. 

1. Pay off high-interest debts: Paying off high-interest debts such as credit card balances is highly recommended by financial planners. 

1. Create your budget plan: Budget is the first step of investing. Understand what suits you the best and how you must invest comfortably. 

Two important points to remember 

• Only invest the money you can afford to lose 
• Never be in a financially vulnerable position for the sake of investing. 

Step 3 Determine Your Risk Capacity 

Understanding your Risk capacity is a very basic step of Investing. Figure out what amount of risk you can afford. 

How to assess your risk tolerance? 

1. Self Assessment: The stock market is prone to ups and downs and hence you must understand how much is your risk capacity. Ask yourself the following two questions for Better clarity. 

• Are you willing to accept higher risk for potentially greater returns? 
• Are you comfortable with earnings-less returns If there is stability? 

1. Understand your time horizon: The risk tolerance is dependent on the time horizon you have. Longer time horizons allow more risks. Less time horizon requires a conservative Investment approach. 

1. Gauge your financial cushion: Assessment of your finances, including the savings, emergency fund and other investments. A solid financial cushion helps to take higher risks. 

Step 4: Determine Your Investing Style 

The investing style of each trader is different. Some prefer a hands-on approach whereas some prefer a passive strategy. 

Therefore you should understand your Investment style after taking into consideration your time horizon and risk capacity. 

How to determine your investment style 

Start with self-reflection and understanding your previous investment habits. 

1. Active: This is when you choose to make your various investments including stocks bonds etc with your brokerage account. Here you set your goals, calculate your risk, and actively participate in the market. 

1. Passive:  This is when you choose to buy ETFs and mutual funds through your brokerage account. 

1. Professional guidance: If you want a more personal and experienced approach to your Investment you can get help from a professional financial advisor. 

Step 5: Select Your Investment Account 

Once you have followed the above steps you have to select an investment account for yourself. Each investment account has its own features, benefits, and drawbacks. You should compare various investment accounts offered by brokerage companies. 

Tips for selecting your investment account 

1. Understand the various types of accounts: There are various accounts like brokerage accounts, Managed Accounts, Dividend Reinvestment plans, Retirement accounts, etc. You should understand the features and the uses of the accounts and then select the account suitable for you.

1. Understand the tax implications: 

• Taxable accounts: Taxable accounts are most common if you are trading online. 
• Tax-deferred account: Here Taxes are deferred until you withdraw money.
• Tax-free accounts: Withdrawals from retirement accounts are tax-free. 

1. Scrutinizing account fees, commissions, and minimums. 

You must analyze trading commissions, Account maintenance fees, Inactivity fees, Subscription-based models, and account minimums. 

1. Assess the additional features: Nowadays there are additional features offered by investment account companies. These include features for Research and analysis, a User-friendly trading platform, customer service, Reputation, and security. 

Step 6: Pick Your Stocks 

The most experienced investors also grapple with choosing the best stocks. If you are a beginner you should look for stability and strong track record stocks. 

Here are the types of stocks you can invest in as a beginner. 

• Blue chip stock:- Shares of very large, well-established companies come under the category of blue chip Stocks. Companies  like Reliance, HDFC Bank, SBI Bank

• Dividend stocks: Companies that have good dividend yield are suggested for beginners. 

• Defensive Stocks: Industries that tend to do well even during economic downturns are called defensive Stocks. 

Step 7: Learn, Monitor Review 

Learning new strategies and discovering tips is the only way to grow in the stock market. Successful investors never stop learning and upgrading themselves. You should read books, and stock market magazines and stay updated with the news. You can also join share market trading courses to learn how to start buying shares and how to earn exponentially. If you want to learn everything about the stock market within a month online you can join Monika Dhote Training Academy's GCD course.

Bottom Line 

Anyone can Start investing in the stock market and earn profits if they follow the steps above. Beginners must focus on gaining knowledge of the stock market and then grow gradually. Taking up courses is also a good choice to learn how to invest in the stock market. To learn from Monika Dhote sir, you can join our free weekly webinar. Contact our team to register 

( 9511095195). Stay tuned for more informational blogs and share your viewpoints in the comments. 

Frequently Asked Questions (FAQ)

• Can I join GCD as a beginner?

Yes, GCD courses compromise everything about the stock market along with the most accurate trading strategies that help you find exact entry dates, exit dates, directions and targets. 

• Does Monika Dhote Training Academy offer any free sessions for beginners? 

Yes, every weekend we conduct a free webinar where we teach basics as well as level trading strategies. 

• How should I enroll in a GCD course? 

The registration process is simple and online. You can directly contact our team and enroll in our courses.