<p>Investing directly in stock markets is not the same as starting a mutual fund SIP. Both are market-linked investment options, yet returns can vary significantly. While the returns from direct investments in stocks may be far superior in a market rally (depending on the selection of stocks and industry) a portfolio with balanced mutual funds of frontline companies may bring in just around stable 18-20 per cent in a long run. However, markets are volatile and you will require expertise, time, patience, financial advisory & market research to pick the right stocks. Subscribing for an initial public offer (IPO) of a company is another good strategy for beginners. With IPOs you can own shares of leading companies at a cut-off price.</p>.<p>With the current investor onboarding pace and sentiment around LIC IPO, it will be no surprise if we get over 3-4 crore new Demat accounts this year. Here is a step by step guide for a first-time stock market investor: </p>.<p class="CrossHead"><strong>Choose a right broker platform</strong></p>.<p>The first step in your investment journey is to sign up with a SEBI registered stockbroker. There are two types of brokers: full-service brokers and discount brokers. Most of the leading full-service brokers offer discounted (digital only) plans too.</p>.<p>Here, the selection of the right broker platform is extremely important. Consider stock trading like any other e-commerce business. As you do not make online shopping decisions only based on price, but also look for ease of using the platform, swiftness of delivery, seller’s guarantee, return policy and so on. Likewise, when making online investment decisions, you must consider the comprehensiveness of the service platform and not just the transaction cost. For beginners, it is ideal to opt for a broker that offers a bouquet of services such as low entry & exit loads, customer support, geographical reach & advisory service along with the ease of platform.</p>.<p>Always remember, you are not going to get a 30-days-no-question-asked-returns policy with your broker. Here, thorough market research is one of the most important services to look for. </p>.<p>Last but not the least, verify the credentials of the stockbroker before sharing your details.</p>.<p class="CrossHead"><strong>Open Demat & Trading Account</strong></p>.<p>You will require a Demat Account, Trading Account, and bank account to make purchases and sales at the stock exchange. Trading and Demat accounts can be opened digitally through most of the stockbrokers. All the purchases and sales happen through a trading account, while the Demat account holds the securities.</p>.<p class="CrossHead">Chose trading platform as per ease</p>.<p>You can start trading through a broker’s mobile app or web platform. It is seamless and orders can be placed online. Always make sure you receive the contract note at the end of the day. Keep track of transactions and collect account statements each quarter. Always verify the transactions and do not share your password or OTP with anyone, not even with the representatives of the broker.</p>.<p class="CrossHead"><strong>Transfer funds </strong></p>.<p>Your bank account will be linked to your Trading Account. To trade, you will require transferring funds to your trading account using net banking or UPI. When you buy a share, the amount has to be first transferred to a broker account and likewise, after the sale of securities in Demat, the funds are transferred through a trading account to the bank account. In the case of an IPO, the amount in your account is locked as per the IPO application amount through UPI and released or debited as per the result of allotment. </p>.<p class="CrossHead"><strong>Know your strategy</strong></p>.<p>Before investing or starting trading, it is important to determine your strategy. It can vary as per your goals, investment horizon, the current capital, and risk profile. Based on your investor profile, your strategy could be active or passive, short-term or long-term, aggressive or moderate.</p>.<p>The returns will vary accordingly. Always remember higher the risk, the higher are the returns & vice versa. For beginners, it is always recommended to use professional financial advice. To start with, an investor should prefer index majors and gradually move to the other opportunities across sectors, with an understanding of how markets work. Also, one should strictly follow the asset allocation determined with a financial advisor as per their profile and invest accordingly. Happy Investing!</p>.<p><em><span class="italic">(The writer is the chief operating officer of Religare Broking Ltd)</span></em></p>
<p>Investing directly in stock markets is not the same as starting a mutual fund SIP. Both are market-linked investment options, yet returns can vary significantly. While the returns from direct investments in stocks may be far superior in a market rally (depending on the selection of stocks and industry) a portfolio with balanced mutual funds of frontline companies may bring in just around stable 18-20 per cent in a long run. However, markets are volatile and you will require expertise, time, patience, financial advisory & market research to pick the right stocks. Subscribing for an initial public offer (IPO) of a company is another good strategy for beginners. With IPOs you can own shares of leading companies at a cut-off price.</p>.<p>With the current investor onboarding pace and sentiment around LIC IPO, it will be no surprise if we get over 3-4 crore new Demat accounts this year. Here is a step by step guide for a first-time stock market investor: </p>.<p class="CrossHead"><strong>Choose a right broker platform</strong></p>.<p>The first step in your investment journey is to sign up with a SEBI registered stockbroker. There are two types of brokers: full-service brokers and discount brokers. Most of the leading full-service brokers offer discounted (digital only) plans too.</p>.<p>Here, the selection of the right broker platform is extremely important. Consider stock trading like any other e-commerce business. As you do not make online shopping decisions only based on price, but also look for ease of using the platform, swiftness of delivery, seller’s guarantee, return policy and so on. Likewise, when making online investment decisions, you must consider the comprehensiveness of the service platform and not just the transaction cost. For beginners, it is ideal to opt for a broker that offers a bouquet of services such as low entry & exit loads, customer support, geographical reach & advisory service along with the ease of platform.</p>.<p>Always remember, you are not going to get a 30-days-no-question-asked-returns policy with your broker. Here, thorough market research is one of the most important services to look for. </p>.<p>Last but not the least, verify the credentials of the stockbroker before sharing your details.</p>.<p class="CrossHead"><strong>Open Demat & Trading Account</strong></p>.<p>You will require a Demat Account, Trading Account, and bank account to make purchases and sales at the stock exchange. Trading and Demat accounts can be opened digitally through most of the stockbrokers. All the purchases and sales happen through a trading account, while the Demat account holds the securities.</p>.<p class="CrossHead">Chose trading platform as per ease</p>.<p>You can start trading through a broker’s mobile app or web platform. It is seamless and orders can be placed online. Always make sure you receive the contract note at the end of the day. Keep track of transactions and collect account statements each quarter. Always verify the transactions and do not share your password or OTP with anyone, not even with the representatives of the broker.</p>.<p class="CrossHead"><strong>Transfer funds </strong></p>.<p>Your bank account will be linked to your Trading Account. To trade, you will require transferring funds to your trading account using net banking or UPI. When you buy a share, the amount has to be first transferred to a broker account and likewise, after the sale of securities in Demat, the funds are transferred through a trading account to the bank account. In the case of an IPO, the amount in your account is locked as per the IPO application amount through UPI and released or debited as per the result of allotment. </p>.<p class="CrossHead"><strong>Know your strategy</strong></p>.<p>Before investing or starting trading, it is important to determine your strategy. It can vary as per your goals, investment horizon, the current capital, and risk profile. Based on your investor profile, your strategy could be active or passive, short-term or long-term, aggressive or moderate.</p>.<p>The returns will vary accordingly. Always remember higher the risk, the higher are the returns & vice versa. For beginners, it is always recommended to use professional financial advice. To start with, an investor should prefer index majors and gradually move to the other opportunities across sectors, with an understanding of how markets work. Also, one should strictly follow the asset allocation determined with a financial advisor as per their profile and invest accordingly. Happy Investing!</p>.<p><em><span class="italic">(The writer is the chief operating officer of Religare Broking Ltd)</span></em></p>