How to buy stocks to invest?

     

     This is a big question for who are newbies in the stock market that how to buy stocks? Let’s understand how to buy your first stocks. If you want to invest in the stock market we need to know how to pick the right stocks and that's what we're going to discuss here how to analyze stock to invest money. Let’s discuss by going through the basics of how stock trading works one essential thing you should know is that stocks shares and equities mean much the same thing. Shares of public companies are traded on a stock exchange some of the most popular stock exchanges in India are the Bombay Stock Exchange BSE and the national Stock Exchange NSE a Stock Exchange is a type of public marketplace for buyers and sellers.

People want to invest in the stock market and want to earn money but they don’t know that how to buy stocks or how to pick the right stocks for a better return. Let’s know the thing which can help you to pick the right stocks for a better return on your investment.

Do research

In this category, people want to earn money but they don’t want to do hard work. When you decide to start investing in the stock market be ready to do hard work.  When you pick a stock to start invest do research before invest you precious earning. Collect information about the company. Do not buy a stock without knowing the company and do research first what company produces company goals, future plans, nature of the company, how companies gave returns from last few years.

Invest money in which you don’t need in short term

We have many responsibilities in our daily life Maybe in the future we will need money for our short-term goals in this case we shouldn’t put all money in the stock market. So we advise you that don’t invest your whole earning in the only stock market. We advise that diversify your investment into various investment tools available in the market.  Like an insurance policy, public provident fund, mutual funds, SIP, etc.   

Apply for a Demat account

When you decide to invest money in the stock market you first need to Demat account to execute your stock buying. Many stockbrokers are providing this facility in the market through their sub-broker. Let's know more about the Demat account. 

What is a Demat Account?

Deal in order to access a stock the exchange you need a stockbroker who executes deals for you on your behalf same to start investing in the stock market you need to Demat account there are three types of accounts.

1) Trading account for place buys or sells order.

2) Demat account for hold your shares in dematerialized form

3) Bank account for fund transfer.

 

·       what is a trading account?

A trading account is similar to a bank account to be opened with a stock exchange registered broker. This account is used for placing an order on the stock exchange.

 

·       what is a Demat account?

A Demat account is a place where we can easily exchange shares of the company. Trading account and Demat account these two accounts will be connected to each other. This is an account where shares are held in a dematerialized form Ex. Electronically instead of the investor taking physical possession of certificates.

 

·       Bank account

Your regular saving or current bank account should be linked to your trading account. The bank account is required to transfer or receive funds when you buy or sell shares through your trading account.

Make fundamental analysis about stocks you select

Before knowing about the fundamental analysis we have to understand that what is fundamental analysis? let's try to understand

What is Fundamental Analysis, and how does it work?

 

So fundamental analysis is the process of determining a stock's inherent worth. Financial statements, external factors, events and industry trends are all included in fundamental analysis. It's vital to remember that a stock's inherent value or fair value doesn't alter suddenly.

When you chose a company to invest your chosen company must have strong fundamentals. You must have Check Company’s financial health before taking action. Check company have a good background, performance and worth investing.  Learn about company’s financial reports, future projects, competitor products and services. We must have to check the bellow thing to do a fundamental analysis

Earnings Per Share – check EPS from last 5 years

Price to Earnings Ratio (PE) – compare PE ratio to equal industry

Price to Book Ratio (PBV) – Lower compared to competitors and industry average

Debt to Equity Ratio – Should be less than 1 (Preferably debt<0.5 or Zero)

Return on Equity (ROE) – Should be greater than 15% (Last 3 Yrs. Avg.)

Price to Sales Ratio (P/S) – Smaller value is preferred

Current Ratio – Should be greater than 1

Dividend– Increasing for the last 5 years

When a company's fundamental signs point to a harmful effect, its stock price will most definitely suffer. But on the other side, if the data is positive, such as an optimistic financial result, the stock price of the company may rise.

Fundamental analysis contributes in the prediction of long-term market movements. It's typically utilized for long-term investment opportunities because it helps you figure out what level the stock might hit. It moreover enables one to locate solid opportunities to invest, as well as those with high growth potential.

Analyses the company future

Ask a question that is there the future of company?  Always Look Company’s growth potential that how much year company will grow from your investing money? Don’t invest money in a company that doesn’t have any growth chances. Invest company that has long life growth chances.

How to function market order system?

Let’s know first how functioning order when we place it.  So when a buyer and a seller agree on a price a deal is done here's a high-level view of how it works when someone wants to sell a share they submit the price of which they are willing to sell it on the exchange buyers do the same they submit the price at which they want to buy a particular stock when the lowest selling price meets the highest buying price a deal is done this process is fully automated and could happen thousands of times per second.

Now place an order according to your risk capacity. Select the number of stocks to want to buy when an order will execute it will be shown in your Demat account.

If you did this step by step then congrats you are now a step away from became a successful investor. Because no one can become rich in a day without making any effort for success. We know that market gives huge returns when you respect every level of the market. So don’t go against the market. If you are a beginner then go step by step.