If you search on Google then you will find thousands of articles about share market for beginners. But among all, you will very rarely find few articles that will provide a complete beginner guide to share market.
So, in this article I have captured everything that a new person need to know. How one can enter into share market and make profit rather than loss as a beginner, everything you will know here step by step.
Topics Discussed In This Article:
- What Is Share Market?
- How Share Market is Best Investment Opportunity Than Others?
- How Beginners Can Enter Into Share Market?
- What is Primary Market and Secondary Share Market?
- Tips and Strategies For A Beginner To Make Profit in Share Market From Starting?
All above topics have been explained in detail below. Before, going deep, let’s first have brief introduction about share market.
What Is Share Market?
A share is a financial instrument that represents a person’s ownership in a company. When a private company want to become a public company then it issues shares that general people and other institutions buy in order to enjoy participation in company’s ownership and profit.
Now to talk about share market, it is a place where buyers and sellers come together to trade their shares of different companies. Share market is also knows as stock market. It is a medium of transferring ownership right in a business and it’s profit from one person to another.
How Share Market is Best Investment Opportunity Than Others?
There are plenty of investment opportunities in the world. But most famous investment opportunities are investment in share market, real state, gold and FD. They all have different benefits and return. But among these, history says that only share market and real state has given highest return to investors.
Investors always have a little bit confusion about deciding which is best investment, is it share market or real state, because both has high return on different levels. But I personally believe that share market is more better than real state investment. Share market provides you an opportunity to convert your shares into cash at any time, which is not available in real state business.
Even to talk about return, if you are intelligent and have more knowledge about share market then it has the potential to give you same return in short period of time that you will get in long time from real state. Real state investment generally takes long time period but share market provides both the short term and long term investment opportunities.
How Beginners Can Enter Into Share Market?
Entering into share market is very easy. Anyone can enter into share market and make investment through following steps:
Step 1:- Open a bank account.
Step 2:- Open a demat account. You can open it in the same bank where your saving account is.
Step 3:- Open a broker account. Brokers are those who plays the role of an agent through which you can buy and sell shares. You will find many brokers near you where you can open account.
So, if you have completed all these three steps then now you are ready to start investing in share market. However, there are two pars of share market. One is primary share market and another is secondary share market. And, to enter into primary market, third step is not necessary. Third step is required only to buy and sell shares in secondary market. Now let’s try to know in detail about primary market and secondary market.
What is Primary Market and Secondary Share Market?
Primary market is the initial part of share market where IPO ( Initial Public Offering ) by a company is issued. The journey of a person in share market actually begins from here. It is the market where a new company issues it’s share and general public place applications to buy. It means, in primary market shares of new companies are created.
Primary market is a medium of converting a private company to public company. Here, you buy share directly from company. To enter into primary market, you only need a bank account and a demat account. Here, you can only buy share. To sell the share, you have to enter into secondary market. The price of a share in primary market is fixed, generally RS. 100 per share.
Now, To talk about secondary share market, mostly people think that stock market means secondary market. It is a market where people can buy and sell shares of any listed company. At first, a company issues IPO in general public through primary market which is distributed among all the applicants and then that company’s shares are traded in secondary market.
Here, one investor buy share of a company from another investor. The price of share in secondary market is not fixed, it changes every time. The price fluctuations depends on many things which we will discuss later. To enter into secondary market, you also need to have a broker account.
16 Tips and Strategies For A Beginner To Make Profit in Share Market From Starting?
As discussed above, there are two parts of share market i.e primary market and secondary market. Making profit in primary market is quite easy because you get share at a minimal price of RS. 100. You only have to apply IPO of new companies at the price of RS. 100 each and sell it when price goes up. Generally, investors says primary market as the risk free market.
But making profit in secondary is challenging. This requires years of experience, intelligence and detailed knowledge about share market. But, I have given some tips below that if you implement and focus on then you will be able to make profit from starting and there will be very low chance to face loss.
1) First of all identify yourself, are you a trader or investor?, are you a short term trader or long term investor? Then only buy the share.
2) Buy only that company’s share which can fulfill your want. For example, if you want to make profit in a week or month then select only that company which has the potential to give you profit in a week or month.
3) Identify the nature of market, is it bull market or bear market. If market is in bull situation then generally every company’s share price goes up and all make profit. So, in bull situation, you can also make profit even if you are a beginner.
4) Start your investment with a low amount. I recommend to start with between 20k to 50k and then slowly increase the amount if you are making profit maximum time than loss.
5) Never buy a share without analyzing a company, it’s share price history, dividend history and latest news or information about that company.
6) Always try to find fundamentally strong company which has given very good dividend to shareholders in past and which is capable for good dividend this year too. But the price of the share is currently very low due to some rumors, news and other reason even the company is fundamentally very strong.
7) Immediately buy the share of fundamentally strong company if there is instant downfall in share price due to some useless reasons.
8) Always be updated about share market, country’s economy, international share market index, government policies etc.
9) Always try to buy a fundamentally strong company’s share in falling market with a long term view.
10) Do a detail research about company’s EPS and PE ratio before buying the share.
11) Always imagine a company’s future and it’s share price in coming time based on your analysis.
12) If market is in bull situation then try to enjoy the dividends of companies because in bull market dividend of the companies get digested easily.
13) Never use the full amount of capital at once. Always keep a backup money with you so that if anything goes wrong then you can use that money.
14) Try to average the share price of fundamentally strong company if it is falling based on the situation.
15) Always try to focus more on investing rather than trading because history says that investor always make big profit in share market than a trader.
16) Lastly, always have a plan ‘B’ so that if situation go reverse than you had expected then you will be ready to fight with that.
So, this is a complete guide for beginners in share market. I have shared all my experience and knowledge for new people who are thinking about entering into share market and make profit. But, you should always remember a thing that making money in this world in any work is not quick and easy. It all depends on how intelligent and knowledgeable you are. Thank You!
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