Investing in shares has been a popular way to earn more money ever since corporate shares were issued for the first time. However, even with the vast plethora of information available today and such advancements as dematerialisation of shares, many are still unaware of how to buy or sell stocks in the market. This article is designed to resolve this ever-present query and explain how one can buy or sell stocks for the first time.
1. Your first stock won’t necessarily mean that it is a profitable investment for you. But you should think of the first stock you have bought as a step to learn how to invest more confidently. This is more of a learning experience and less of an opportunity to create wealth.
2. Do not be afraid of losing. It is quite likely that you might lose some money in your first ever investment. But this should not discourage you from trying again. It will only teach you how to avoid mistakes the next time.
3. Investing is always a continuous learning experience. You cannot be an expert investor in your first time. Even mere theory or second-hand market knowledge cannot prepare you for what’s in store in the market. But it is always advisable to keep learning as you invest more frequently in the market.
Before you actually go ahead and buy your first stock, it is essential to know what type of an investor you actually are. Broadly speaking, there are 3 main types of investors in the market:
1. A DIVIDEND INVESTOR buys stocks that continue to pay dividend payment at regular intervals based on how many shares you own. These investors look for companies that have the financial strength to pay regular dividends to their shareholder, irrespective of the economic situation. Thus, dividend investors buy stocks for both capital appreciation and income.
2. A VALUE INVESTOR is of the opinion that the market has strong reactions to any news about companies. They take advantage of this situation and buy shares of companies that are temporarily undervalued due to temporary market trends, thus buying the shares at bargain prices.
3. A GROWTH INVESTOR has an eye on companies that have strong projections of sale and earnings growth. These investors generally rely on the market price as an indicator of a company’s future profits. A growth stock, in this regard, is a stock that will see at least a 15% increase in sales over one year.
So, are you a Dividend Investor or a Growth Investor? It all depends on what is your preferred approach towards investing. And you can also establish your approach by factoring your financial objectives and weighing your own appetite for risks in the market.
By following some simple guidelines, you can end up buying a stock that might prove to be a worthy investment:
1. If you wish to buy a good stock in your first time itself, then it’s best to do some research of your own. It can begin simply by listing down companies you know as household names – like the brand of your toothpaste or the detergent that is used. You can find if stocks of the parent companies of these brands are listed in the market and then analyse and compare their stock performance individually.
2. Always start small. It doesn’t matter if you have bought only a few stocks of a company to begin with. Your first investment is supposed to be a learning experience and not a means of merely making profit. So, take it easy in your first time and keep on gathering valuable insights as you make cautious decisions.
3. Don’t waste too much time in selecting a good broker at this juncture. It is more important to get started with a basic demat account and a basic package of services. You can thus tap the right opportunity without wasting too much time on deliberating which broker to choose.
4. Take enough time to build your portfolio – do not hurry in your investment decisions. Plan your investments properly and then follow the plan carefully without following the herd in investing in any stocks you wish.
5. Always learn from your mistakes. Every misstep or mistake will teach you how to navigate markets even more confidently than before. So, don’t be afraid of the same.
It is always advisable to start investing when you are still young and thus in a position to handle risks without the fear of losing investments due to uncertainty or risks. So, get started with your investment journey without further delays.
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