Many investors, especially first time investors are confused about how to invest in shares. In fact “How to invest in shares?” is one of the most asked questions on search engine Google.
In case you already have a PAN card and bank account the primary step would be to select a stock broker who will open a demat and trading account for you. For those investors who don’t have a PAN card, it is possible to apply for the same on the NDSL website by visiting www.onlineservices.nsdl.com.
Currently the only way a retail investor can invest in shares is by opening a trading and a demat account is through a stock broker. An important thing to understand is that whichever broker you open your account with would be a part of one of the two depository services in India and would be known as Depository participant (DP). Stock brokers cannot hold your stock and they have to maintain them with one of the depositories. So when you open a trading account with a broker, they will also open your Demat account with one of the depository service.
Demat services are provided in India by Central Depository Services (I) Limited (CDSL)and NSDL and National Securities Depository Limited (NDSL).
It take approximately three days for the paperwork to be processed and for your trading and demat account to become active. Some brokers, now offer online account opening within 30 minutes on Aadhar based activation, however you would still need to send physical copies of some documents by post.
In case you are planning to do lot of trades, you can consider opting for the services of a discount broker which can help you in substantially saving on brokerage and associated costs, as they offer a flat charge on brokerage per trade. In case you don’t intend to do lot of trades it would be best to go for a full-service broker as they offer a lot of value-added services in addition to the basic services.
Once you have opened your demat and trading account, you can start off with the process of investing. The above points should clarify all your doubts about how to invest in shares. However apart from “How to invest in shares?” the second most query which rages across minds of investors are “Where to invest in shares?”
Hence it is very important to understand how the stock market works and the different components and the different participants of the stock markets. Many investors ignore this crucial factor and as a result end up with losses on their stock market investment.
As you might be aware of, there is hardly any substitute for knowledge. That’s why before investing one should read and understand the complexities of stock market by reading books on stock markets written by market experts and successful stock market investors. But still, if you have any doubts in your mind it is would be highly advisable to seek professional advice from a stock market advisory service.