Investing in stocks is an important strategy to build wealth over time. To beginners, the process may seem challenging. However, it is not too difficult. With the emergence of trading apps, the process has become easier. In this blog, we will discuss the step-by-step guide to how you can invest in stocks.

Getting Started: A Step-by-Step Process to Get Started

Here is a step by step process to help you buy stocks.

1.    Select the Right Broker

Start by selecting the right broker. You can compare different brokers based on factors like account opening charges, maintenance fees, etc. Most of the brokers also offer a stock trading app, which is a big plus for trading on the go.

2.    Open a Demat Account

In India, you need to have a Demat account and a trading account for buying stocks. A Demat account holds your stocks in an electronic format. Opening a Demat account is a simple process wherein you need to provide documents like identity proof, address proof, and a passport-size photograph. Most brokerage firms allow you to complete the KYC process online.

3.    Add Funds to Your Trading Account

The trading account is used for the sale and purchase of securities. To invest in stocks, you need to add funds to it. You can easily do so online. You might want to start small or consider rupee-cost averaging, an investing method where you invest a fixed amount regularly no matter at what price the stock is trading at. By doing this you can lower the risk of jumping in with all our money at the wrong time.

4.    Research and Identify Your Stock

The next step is identifying the stock(s) in which you want to invest. For this, you need to have clarity regarding your investment objectives and your risk profile. Thoroughly analyze the performance and future prospects of the company and the sector you want to invest in. Look at factors like return on equity, return on capital employed, debt-equity ratio, and price-earning ratio.

5.    Place the Order

Having identified the stock(s) you want to purchase, log in to your trading account. You will get access to your broker’s trading platform. Search and choose your identified stock. Next, choose the type of order you want to purchase. A market order means placing the order at the current market price. In a limit order, you place the limit at which you want to buy the share. 

Before placing your order, you will be required to review the details of the order. Verify whether you have chosen the right stock, quantity, and type of order.

6.    Execute the Order

After verifying the details of your order, execute the purchase. Once you do that, your broker will process it and send you a confirmation. The confirmation will include details regarding the share purchased, the number of shares purchased, and the associated price and transaction fees.

7.    Understand Settlement

The settlement process takes (T+1), which refers to the transaction date plus one day. It is during this period that the stocks are credited to your account and you are officially the owner of your stock.

8.    Monitor Your Investment

You should monitor your investments once you purchase stocks. Follow market trends, company performance, and news regarding your stocks. Check your portfolio regularly with the tools provided by your broker.

Conclusion

With new age stock market apps, purchasing shares has become easy and can be done at the convenience of your home. In this blog, we have discussed the step-by-step process of purchasing shares, which we hope has helped you. Happy investing!