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  • Category: Stock Market

    How much minimum money needed to start investing in stock markets?


    Planning to invest in stocks? Searching for detailed financial advice online? Here, on this page learn about the basic requirements to start investing in stock.

    I am planning to start investing in stock markets. Although I have brief knowledge how they run and how to monitor stocks, I have very little knowledge where, to begin with. What are the basic requirements to start with stocks?
    Bank accounts, PAN, etc. How much money is basically needed to start investing in stocks? Can we buy a single share worth 100's of rupees or do we have to buy many stocks in bulk? Kindly guide step by step for starting investments in stock market.
  • Answers

    7 Answers found.

  • If you want to start investment in this area then the basic requirement is a savings bank account in a bank linked to a demat account.

    These accounts can be opened by filling application forms along with photograph, proof of address and identity.

    Demat account is a very important account where you can login online and buy or sell stocks of your choice. The money will be taken from your savings bank account as per the permission you give online. After selling a stock/share, money will be deposited to your same account. Now a days many online companies like 5paisa.com or sherkhan.com etc are also offering demat account. So demat account can be opened with these entities also rather then with a bank. Demat account will generally have an annual fee for servicing you and keeping your shares etc with them in demat form. They will charge some brokerage also on buy and sell transactions. Some companies do not charge annual fee but take brokerage while selling and buying. You can buy or sell shares, bonds, mutual funds etc through this demat account.

    There are two stock exchanges in India - BSE and NSE. You will have to mention while buying or selling which exchange you want to operate. Practically it does not matter much but at instances when a share is quoting slightly different in two exchanges it matters.

    Anyway when you buy a stock it will be credited in your account and you can see it under option 'Demat balance'. After sometime when you sell it you have to allocate it or a part of it for selling and when it is executed it will be reduced from demat balance accordingly and the amount realized through sale will be credited in your saving bank account.

    Generally the buy or sell transaction work on a T+2 pattern. It means if you trade today you will get the shares credited to your account on day after tomorrow. If that is a holiday it will go to next day. Similarly if you sell today you will get money in your saving bank account day after tomorrow and if that is a holiday it will go to next day.

    There is no limit how much you can transact in stock market but some places the minimum is Rs 500 or so per occasion per stock.

    There is a time when you can perform the online trading. Presently it is 9 AM to 3:30 PM. Online trading is very fast and you will know the result of your order immediately. For example you want to purchase a share and you are seeing that at that time it is being sold or purchased around Rs 120 (you can see it inside your demat account easily while transacting) and you give a buy order for say 32 shares at market rate you will immediately find that your order has been executed and you will get a message or go to my orders and see that you have got those shares say at Rs 121. Now in addition there will be a brokerage charged to you which varies from one demat company to other and say they charge you 0.5 %. So brokerage per share sold at 121 will be Rs 0.61 and an amount of 32 x 121.61 will be taken out from your saving account.

    Same thing will happen while selling and a brokerage will be deducted from sell amount and balance will be deposited in your saving bank account.

    If you feel that market is in bad shape and share prices are going to fall you can place a limit order in place of a market order. For example in the above case you anticipate that the share price will go down and give a limit order for buying at Rs 115. If your speculation goes correct and share price drops to 115 or below then your order will be executed at 115. So you are benefitted by buying at a lower price. All these options are provided in your online buy window which is very interactive. In a similar way you can sell your share at a higher price in an increasing market by giving a limit that sell this if the share reaches such an such value.

    Please note that limit order may not get executed as the condition given by you does not take place in the market. If it so you will have to start afresh.

    These are only some basics and you learn more when you actually do it.


    Knowledge is power.

  • For doing activity in share markets, you should have a demat account. You can open it in the bank where you have SB account and then you have to link these two accounts. Through this account, you can buy and sell shares listed on Bombay Stock Exchange (BSE) or National Stock Exchange(NSE). Anyone you can choose, It will not make much difference. Doing these selling and buying activities through demat account is very easy and it can be done online. The trading activity will be on during the working hours of the exchange. The timings are 9 AM to 3.30 PM. When you want to sell or buy the shares open the account, you will see the scrolling of various company share and values. you can do the trading there.
    Coming to the money required, there are no expenses here except the share values and commission which is also known as brokerage. Basing on the amount you can invest you can think of purchasing the shares. You can start with a few thousand rupees also.

    drrao
    always confident


  • Stock market investments are a way to quickly earn or loose money. There are people who buy a sinlge share or thousands of shares. There is no minimum or maximum as long as the amount in a legal source of income.

    1.Basic requriments (knowledge)
    The knowledge of how to buy stocks - based on the brand, its service, its supply and demand equation, its debt and it's future progress.
    To start with, I would suggest focus of large cap stocks, the returns are not very high but they can tolerate market ups and down better. Please follow a few stocks, Inofsys, Maruti,ITC etc for a few weeks

    2.Tools to invest
    You need a demat account, it can be given by the bank themselves or their are lot of stock trading companies who do it on your behlaf
    Negotiate for a good Annual Maintenance charge, T+3 or 4 days to settle account (you get 3 days to pay the money after the day which you buy). You have JM financials, Kotak securities, Sharekhan or Motilal Oswal.
    You would need an active bank account, proof of I.D, address,income,residence and age.
    You can do it online or they come home with the forms. Initially choose only for stocks, do not try out futures/commodities/forex these are very volatile

    3.How much money- Although there is no limit for legal purpose, you have analyse your own resources. Normally for a salaried employee about 10-20% of the montly savings can be used. If your risk is less, stick to this because, in the event of a loss, you would not loose sleep over it.

    4.Single or multiple companies?
    There are people who buy3-4 shares regularly over a period of time with excellent knowledge of the company and made good money. There are also people who by a basket of 5-10 shares and over a short period made good money. So, it depends on what is your time frame, are you trading to make a regular monthly income or use the stocks like a MF on a long term basis.
    Some people have multiX stocks ( stocks that literally multiply over a period of time). You can check Sanwaria Cons, Godavari Power, Tata Steel etc.

    5. Single or bulk?
    It is always not wise to buy in bulk. You can see for each stock there would a 'Block Deal' worth crores listed, these would be the high players, fund houses who buy with a long term horizon.

    You have to expect the unexpected in the stock market. For instance PC Jewellers, opened this moring at 486, around 10:30 AM fell to 195 and then now it's back because of a new that could potentially affect its growth. There has been a Block Deal of 2L shares worth 6.36 crores. For a retial investor, what happend today would have sppoked them, but for a large fund house this has been a good oppourtiny.

    Start slowly, be careful of the amount and when you invest, any news (quarterly results, government policy, sentiments, news that has a major impact on the order books or raw materials) that can affect the company, reflects on the share price, so you need to be watchful.

    When your stock has done very well you can do what most do, book partial profits( if you have 100 shares of X, you can sell 50-75, get the profits in hand and then invest the principal into another good company). If the share is performing poorly, then you have a choice of holding it, averaging the price ( buy more so that your average price becomes lower) or book losses. All these needs time, patience and effort.

  • Before investing you should know how stock market works and different types of trading like equity, commodity, futures and options etc. Stocks are almost volatile, but it is a best way to build fortune. One of the most important rule in trading or investing is "Do not Gamble". Find a good brokerage firm and get know what are the charges leived on trading( NSE/BSE charges,SEBI charges, STT, GST)

    For intraday trading or investing you can start with even 5000 rupees. Pick good share , even after getting experts advice on particular stock study the company by yourself before investing.

    First Step : Open a demat account and connect it with your bank account. Documents required are PAN, Bank statement with MICR or cancelled cheque leaf, Photo and account opening charges. Most of the banks are brokers them self, but if you want less brokerage charges go with someone like Zerotha or some other brokerage firms.

    Second Step : Add funds to your demat account and trade stocks using your mobile application or computer. These days fund transfers can be made even through IMPS between bank and demat accounts.

    Even you can buy one stock and sell. Watching and knowing things is different from trading.

    All the best for your fortune making.

  • Before investing money in stock market you should study about stock market in detail. For begineers its risky to invest money on stock market so risk capacity you have is also matters. If you have less risk capacity then its best to invest in bank FD(fixed diposit). You can invest money in mutual funds such SIP(System investment plan), Adarsh credit ltd,...etc and you can also buy shares. You have to learn and understand the stock market. Which shares you buy and when is also important. Right time to sell shares. How much time holding a shares. You need two accounts for buy and sell shares one is Trading account and Demat account. If you cannot take risk then You can on invest on debt mutual funds but the tax will be calculated as same as calculated for fixed deposits. You can get benifited with dept mutual funds also because of market up and down and there is not a fixed rate like FD in banks. Acc. to market down and up rate is application on your invested money. Remember in Demat account shares are deposited not cash whereas trading is all about buying and selling for secondary share market and primary market is IPO(initial public offer). you can invest in a proper way and at right time every month.

  • Congrats for such a good decision to invest in shares. My sincere advice is, before getting into this stock market, please check the few things.

    Your control of your emotions
    Greediness
    Sensitivity
    Financial situation

    These are very important rather than having a Demat account.

    I am a housewife and also previously worked as a analyst for eight years. I have experience in share market for more than ten years. Many a times, we never have control on our emotions, our greed and our patience.

    I strongly advise you to go for equity rather than futures and options ( f&o ). You can start with paper money first. Observe a few stocks for a month. Their movement, volumes, ur paper currency gain or loss. If you feel comfortable, start investing in a small amount. Use dips. When a share price falls consequently for two or three days, start buying that in dips. again knowledge gradually. Please don't miss your personal life because of this. All the best.

  • Investment is in the stock market one of the way for creating wealth in long run. One can invest 10 % to 30 % of his earning in the stock market depending on his age criteria. The Investment made for long term in good fundamental companies generate good returns. Investor must do through study before investing in the market. Day trading is also one way for participating in stock market. Day trading requires lots of experience in the stock market. Day trading is not advisable for new comer or the person with low risk profile.

    You can take the route of mutual funds for investing in the stock market, There so many mutual funds available to invest in. The return on investment depends on type of fund you select. There are debt fund , growth fund, income fund.Stock market investment is must along with other class of investments like property, gold, fixed deposit, Lic policies, etc. Investment is always better to have a peaceful retirement .


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