Buying your first stock

Buying your first stock is the most exciting thing to ever do. It gives you the feeling of being an adult, specially if you are buying your first stock in your teens. However, in India only 5% of the population invests directly in the stock market, which means there are a lot of people who are yet to be made financially aware. As many people are not aware, they don’t know how to start investing in stock markets which leads to them make losses.

There are a lot of unanswered questions which have been asked by most beginners when they are about to get started in stock markets. Here are few guidelines you must follow before you start your journey in stock markets.

1 Invest in companies around you:

One of the ways to get started for beginners is to invest in companies they see around them. Look around in your surroundings and you will find companies, whether it is your kitchen, hall, bathroom, bedroom. You can find companies to invest in by looking at the shoes that you wear or trousers, t-shirts, shoes, car, pen, pencil, soap, innerwear, sim card etc.

You have been using these products for years, why not study them and invest in them?

I am talking about Titan, HUL, Dabur, Maruti Suzuki, PAGE Industries (parent company of JOCKEY), Bata, Reliance and the list goes on and on.

Everyone is aware of these brands, then why not understand the real business behind them and make money by investing? There may be many such companies that exist, find them and check if they are listed on the stock exchange.

Keep your eyes opened and you will find great investments!

2 Start small:

Let’s say you hate watermelons and your friend comes up one day and gives you this lovely watermelon juice to taste and says its different and you’d really love it, would you have the entire glass at once? Or just try a few sips here and there? You would obviously take few sips to see if you like it or not instead of having the entire glass.

Similarly, when buying stocks, invest a small amount. Many experts recommend starting off with the money you can afford to lose and never get back. When you start small you get a hang of how markets work. Most investors should begin with an amount of around 5k-10k. Most investors make a mistake by investing their entire savings at one go in stock markets and when their shares start falling by 50-60% they start blaming the markets.

Start small, because if your stock does not perform well you won’t lose a lot of money. On the other hand, if your stock performs well start increasing your investment amount.

3 Do your homework properly:

There are a lot of companies around us, but have they all performed well? Companies like Jet airways, Videocon, Dish tv, Vodafone idea have not lived up to the expectations and made losses for investors. So, don’t invest blindly in companies, do your homework before investing in companies that you see around you. Don’t depend on other people to suggest you some stocks. If you do that once it becomes a habit and you would never take your own investment decisions.

You might even do a lot of mistakes while picking stocks, don’t lose hope, whether it is life or investing it is important that we learn from these mistakes and not repeat it.

4 Don’t wait for the perfect plan and time

Don’t wait for the perfect plan to start your journey in stock market, the fact is for a beginner there cannot be a perfect plan. Many investors waste time in find the best broker, best stock etc. Unless and until you don’t start you won’t know what really suits you. Just remember investing in stock markets, demands some time and effort. You need to be aware about the recent happenings in the stock market and actively make decisions.

5 Find a mentor

As a beginner stock market is a tough place to be in. You might get confused or take the wrong decisions. Find yourself a mentor, who could truly guide you. Don’t assume that having a mentor means there would be sure short success. Find a mentor for guidance not for taking short cuts.