How to invest in stock market?

Do you have idle financial resources lying in banks? Scared to invest in share market fearing loss? Don’t know how and where to invest?

If you have some liquid cash in a bank which earns only a nominal interest either in savings account or fixed deposits, try switching to stock market. You can either invest in shares or mutual funds.

Mutual funds promise safe returns over a longer period as they are invested in SIPs. Stock market is is also a good choice. One one can invest in intra-day, short term and long-term stocks. Stocks can be classified into small cap, mid cap and large cap stocks. One needs to have diversified stock investment which means investing finances into different sectors like banking, metals, infrastructure, IT, pharma, automobile, etc.

For initial guidance, you can tie up with any financial stock brokers like Motilal Oswal Securities Limited, Share Khan, Karvy, etc.

You can even start off on your own with SBI, ICICI or any other bank. You can begin with a small amount of Rs 5,000 also and invest in small caps. To reduce the element of risk, maintain stop loss and exit policy.

Let us consider an example. If you are buying 100 shares of stock X at Rs 80 and your target is Rs 90, you get to book a profit of Rs 1,000 when the share price reaches your target level. On the other hand, if you maintain a stop loss of Rs 75 to 78 during unfavourable market conditions, you can reduce your loss.

A wise investor would invest in short term and long term and maintain a fine balance in various stocks. Investing in mutual funds with a lock-in period of 3-5 years would keep you more on safer side. Several companies have started free online seminars and webinars for initial guidance. So just go ahead and let your money work for you.

Sneha Latha