Friends, if you want to invest your money in shares, then you are having a very good time. Today we tell you about the share market in full detail, how the share market is used. So let's start. Friends investing in share market is a long term process which can help you a lot in managing your finances. Friends, if you are new to the stock market, then you may find it difficult to invest in the stock market, especially when you are just starting out, because it may seem very complicated or risky. So friends, we have found a way to start the stock market in simple language. Which can help you a lot.
Friends, two of the main reasons why you should invest in the stock market are the possibility of getting high returns on your investment and developing financial discipline. For example, investing in stocks has yielded a higher rate of return over the last decade when compared to basic savings instruments such as fixed deposits. Timely investing inculcates the habit of financial discipline, encourages you to save money and invest carefully.
Here is a brief guide to help you with the process of investing in the share market.
What is stock market
Friends, in simple words, the stock market is a market where financial instruments are traded. - These can be stocks, bonds, commodities, etc.
There are two primary stock exchanges in India.
1. National Stock Exchange (NSE)
2. Bombay Stock Exchange (BSE)
Friends NSE is by far the largest, with more than 90% cash trading. There are other exchanges for commodities like Multi Commodity Exchange (MCX) and Indian Energy Exchange (IEX) for power trading.
Along with all the activities the participants of the stock markets, including day-to-day trading, instruments are being traded. Exchanges that enable financial instruments to be traded. The stock market is regulated by the Securities and Exchange Board of India (SEBI).
Friends Apart from the listed companies, these exchanges also manage the indices. An index in the stock market is a basket of stocks that represents a theme, be it size or industry. It also allows investors a general gauge on trends in the stock market.
The most common indices in India are Nifty and Sensex. Nifty is a basket of top 50 stocks by market capitalization listed on NSE. Sensex is a common index of 30 companies listed on BSE.
Friends, stock market indices are generally used to benchmark the performance of fund managers and other stocks. For example if a mutual fund benchmarks its performance to Nifty. If Sensex gave 15% return this year and Nifty gave 20% return, the mutual fund actually "underperforms" its benchmark. This means you would have been better off buying those 50 Nifty stocks instead of relying on the expertise of the fund managers.
Friends what is the cost of investing in share market in 2023? Let us tell you in full detail.
These are some types of fees. which you would normally pay.
What are the transaction costs
Friends, if we tell you a very clear thing, it means that all the brokers are paid brokerage, which is a fee that they take for the convenience of trading for you. With the advent of discount brokers, these costs are coming down rapidly. Apart from brokerage, they also collect taxes paid and dues to the government on each transaction. Such as Securities Transaction Tax (STT), SEBI Fee, Goods and Services Tax (GST), and many more.
Demat Charges
The broker or brokerage platform opens your demat account for you, they do not operate it. Demat accounts are operated by Central Securities Depositories like NSDL or CDSL under the jurisdiction of the government to protect your interests. These sub-brokers are expected to pay you a nominal annual fee (usually collected by your broker or brokerage platform) to maintain your account so that you don't get cheated in any way. The charges are anywhere between INR 100 to INR 750.
As tax
Friends, you give a percentage of the profit from your investment to the government as tax. For stocks, if you hold them for more than a year, you pay long-term capital gains tax, which is 10%; if you hold them for less than a year, you pay short-term capital gains tax. , whose tax is 15%. Both these tax rates vary depending on the cess or surcharge levied by the government.
How do you know which stock to buy
Friends, risk appetite is the amount of risk that you can face on your own risk. Several factors affecting risk appetite include investment time frame, age, goal and capital. Another important variable to keep in mind is your current liabilities. For example, if you are the only earning member of your family, you will be less inclined to take risks. Here, you might have more debt, large cap stocks in your portfolio.
On the other hand, if you are young and have no dependents, you can increase your high risk appetite by 100%. This may allow you higher exposure to equity versus debt. Friends also within equity, you may be able to invest in more small caps. Which are high risk stocks. The starting point in the stock market is to make choices keeping in mind that risk and reward go hand in hand.
Invest regularly
When you have a demat account. So you need to allocate money for investment according to the rules and set a personal budget. Track your expenses and see how much you can set aside. The best way to invest in the market is by using Systematic Investment Plan (SIP). A SIP is investing the same amount every month in a mutual fund. The stock market allows you to average out various market levels whilst maintaining good investing habits and gradually increasing your investments as you gain confidence.
Build a diversified portfolio
The basic rule for building any portfolio is to invest in a diverse range of assets. This is so that it dilutes the impact if a certain asset performs poorly. Diversification is spread within asset classes, industries and cycles. Friends, it can be tempting to invest all your money in an industry that is on the rise. But it's always better to distribute across industries, balance market cap exposure, and offset the risk of equity stocks with stable, but low-return bonds. So that in the end, use SIP to ensure that you have invested in securities across different market cycles.
Keep rebalancing your portfolio
If your priorities change over time, your portfolio should change to reflect this. To ensure that you are not over or underexposed to any one stock or asset class. You should keep monitoring your portfolio every two quarters. This is also important as you age and your priorities change. For example, you may want to lower your risk when you start a family or when you are nearing retirement age.
Ground level note
Anyone can invest in the stock market. It is a life skill that needs to be honed and like all good things it takes some patience, time and study. You can achieve your goals and dreams very easily from the stock market.
.jpeg)
0 Comments