If you have ever wondered about building long term wealth then you have got to invest in stocks. Statistics and data have shown that one of the key ways to build long term wealth is to invest in stocks. Almost all the members of the Forbes 400 wealthiest American list made it till there due their early investments in the stock markets. These people own a huge block of share in some private or public company.
How to buy shares for beginners?
One of the very first things that is required in order to buy shares and start trading is a Demat account as well as a trading account. Having a Demmat account will certainly enable you to store all the shares that you have purchased. The Demat account usually acts as a common repository. The real buying and selling of shares will start once you own a trading account.
While buying a share using your trading account the money is directly transferred from your bank account. This is how the share is directly transferred into your Demat account.
In case you sell a share, the share is then transferred from your Demat account directly into the share market. Your bank account will gain the money that is gained out of the transaction.
How to choose an online trading account?
Before you start trading in the stock market your Demat and the trading account that you have already opened must be linked to the investors bank account. This way online money transfer can be facilitated. This happens to be one of the most crucial steps in your way to learning how to buy shares for beginners.
This will not only familiarise you with the interface but you will also gain access to the essential tools of trading as well. It is also important for you to check the credibility of the broking firm. You must be allowed by the trading account to make online investments in equity shares and mutual funds also.
You should also educate yourself about the trading terms like the IPO, portfolio, buy, sell, spread, yield, index and volatility.
Here is a six step plan to buy the shares:
- Find an appropriate online broker
- Initiate an investment account
- Upload money to your account
- Find a stock to buy
- Buy a stock
- Review and analyse the position of your shares regularly.
- Find an appropriate online trader- The first and the foremost thing to do is to find a accurate online broker who would provide you with all the necessary details. You must take into account all the necessary considerations such as the fees of the broker, the accessible markets to trade, trading platforms as well as safety measures.
- Initiate an investment account- After finding an online broker all you need to do is to initiate an investment account. This is a step that you can do online. The investment account involves you to buy shares online. It is moreover like a bank account where you can hold cash and also buy shares from. A couple of days are usually required to open an investment account.
- Upload money to your account- You must have sufficient funds in your investment account to buy shares. You can either choose to deposit funds through the debit or credit card or make bank transfers.
- Find a stock to buy- After you have uploaded some amount of money into your account, you can then start your search for the best stocks available in the market to purchase.
- Purchasing the stock- When you have almost everything such as the cash, the account as well as the stock that you wish to buy all you require then is pushing the buy button. There are different order types you can choose from while placing an order.
- Review the position of your shares regularly- Once you are done buying the shares you can then sit back and analyze the investments and your strategy of investment.
There are a lot of people who are pretty confused about How to buy shares for beginners. For them, the process seems to be quite complicated. Things will only get easy once they start educating themselves.