What is share market and how it works for beginners

What is share market

Have you heard the terms what is share market and how it works? If your answer is no and wants to know how to start investing in stocks, this article will help you a lot in understanding the stock market for beginners. So let’s dig it.

Most of us want to secure the future with the money that goes high and higher once we reached such level where our future will be secure. It will be a glorious future where we will get financial freedom, where we don’t have to look back once again anymore. Sounds so good for you? Now the question is how could we reach that moment of life that secures our future? Well, that’s called investment and I am happy to see more and more people are interested in investing in share market.

What is share market and how it works:

These four steps of personal finance will help you to determine when and how you can start investing in stocks. Why four steps? Let’s find out.

It could be a graph of the financial life of any person. It’s all starts with having good shopping habits and expenses, trying to get out of debt, later trying to save some decent money and finally think about start investing in some useful financial platform. No doubt, most of us carry out this kind of financial circle in our life.

So, what is the best way to invest money? You may have a different choice but I will say Stock Exchange will be the best option to grab. It is an investment option in the financial market that has good rates of returns with relatively low risks. Now if you are a newbie, you may ask what is share market and how it works?  You may also think about what is required to become a successful investor in the share market. Here in this post, you will have a clear idea about the share market basics for beginners.

What is share market

Steps to investing in share market:

The steps to invest in the stock market are quite simple but the executions of them are not so easy. Today, I will explore what those steps are and using those steps how to invest in stock market for beginners. This path of information will help those who are just considering jumping into the market to make good money. So be with me and I will take you until the last steps when you made up your first profit from the stock market. Let’s begin!!

1. Set up a goal to start investing in stocks?

I know it sounds cliché, but it’s 100% true. Before I even begin to see the investment options, I must know what my objective is. This first step is so crucial and surely it will determine what you want to achieve from your investment.

For example:

  • Do I want to invest my money to go on a trip in 2 years?
  • Do I want to invest now to have a decent retirement in 20 years?

An essential part of your planning is, it should be clearly specified. You have to know the perfect timeline when you want to get your money back with the profit and what you will use it for after getting it back.

2. Develop your strategy to achieve your goal

There are several options to multiply your money (invest in a business, in real estate, etc.) and in each of them have a different type of business strategy. But one thing is common in all of them which is RISK. They all have the risk involved in their investment strategy. So what is the best option to choose from? For me investing in stocks market is a smart choice as it plays little effort to manage your investing profile. If you are serious about knowing how to start investing in stocks, it is very vital to know your investing profile and the level of risk that you are privileged to take.

To understanding the stock market more efficiently, ask yourself:

  • What is share market and how it works?
  • Am I willing to take a higher risk or lower risk in my investment?
  • What is my sensitivity to changes?
  • If I see that things are wrong, will it damaging my personal lifestyle as a whole and will I able to recover once again?
  • Can I endure a bad year because I know that the results will be reflected in the coming future?

This is called defining the risk profile and I recommend that you have to gain some knowledge of it before entering the share market. The Brokerage Houses can also help you to understand how to start investing in stocks. They can also help you to discover the risk management system.

What is share market

3. Choose a term and path to follow your goal

Here, your task is to determine when and how you want to achieve your goal.

Ask yourself:

  • Do I want to achieve my gold slowly but surely?
  • Do I prefer the fastest way to achieve it with high risk?

We all know that any kind of investment will involve a risk factor. And normally, the higher the risk you will take, the greater the possibility of achieving a large return. Both things are difficult to have and for that reason, when defining your investor profile you must have to make your decision. Find the best way to invest money. Choose if you want the longest but the safest path or do you want the shortcut that has holes, dangers, where a tire could get stuck in a hole.

4. Pick a vehicle to use in the path

If you already chose to go on a stony path where you could go quickly but you know there is a chance of sliding down into the mud, then you should be thinking about a jeep or truck: something that has a better grip! But if instead, I decided to go by a nice and even road, where I’m going to take longer but surely I will reach my destiny without any hassle. In this case, I could go in a lower car, with air conditioning at a constant speed. Your options are something like that:

5. After understanding the stock market its time buy your share

Finally, once you have defined what your goal is and what you are looking for, then you are almost ready to invest your money in the stock market.  Now make sure how much money you have and when you need it back. How much risk you can take and what is the best way to invest money? All these things are very crucial for stock investment. Once you have done all these things accurately, it is time to invest. But the process does not end there.

An important part is that you must try to have good access of having good information. Choose an investment plan that you think will work for you according to your investment strategy. To get the better result, make sure you understand properly what they are offering you. With a decent study of all those above, you can make your first move to investing in share market.

What is share market

Be alert when you are not sure how to start investing in stocks

In a fixed-income stock exchange market, there are several companies and institutions to choose from within the Stock Exchange. So, to make the right decision based on your needs, you must consider the following:

Make a filter of your options:

If you are going to choose to invest in the mutual fund or in the bond, there are many of them in the market and offering different rates of return. To go for a fixed income based investment, you have to go according to your plan. For example, there are 15 assets but your plan says that you require assets for 3 years, so you have to start eliminating those that are for 10 years or for 1 year. You must choose the one that has the liquidity you require, the one easier and simpler and the one immersed in the business you know the most.

Determine the liquidity you need:

Here you have the possibility to define your investment according to your plans and how you want to see it in the future. For example, your plan is to buy a bond and leave it until maturity or you want to buy it and later sell it with profit in a shorter period of time and then buy another one.

Compare rates of return:

If you are evaluating similar products in terms of risk, term, type of business, then look at which one pays you the most. For example, you could have one that pays 7% and another that pays 5% at the end of the year. The answer of which one you have to choose is very easy.

How to choose the Stockbroker:

Remember that to invest in the Stock Exchange you need to do it through an intermediary or through Stock Exchange broker. Therefore, before start investing in stocks, you have to decide which options suit you best. This decision should be based on who you have the best access to information with and who you feel most comfortable with. You should also look at the cost (the commission they will charge you for managing your investments) and compare the price with others.

Keep in mind, sometimes a brokerage house may offer you a better price but does not answer when you call and your order system is not as efficient. So getting your investment with them will not be worthy. Maybe the other broker offers me a higher price but is more proactive, keeps you informed of what is happening in the market. I think that suits you better to follow up and make decisions about your plan. Here, understanding the stock market is very important when you know very little about how to start investing in stocks.

What is share market

Respect the plan you made in the beginning:

This is fundamental! Try not to change your plan and investment strategy in the halfway just because some news suddenly caught your attention. That would be like driving your car sitting under the air conditioning in a nice and smooth highway but all of a sudden deciding put it in the shortcut, which has gaps and a more winding road. And if you already got into the shortcut, you are not going to get back on the road once again anymore. It’s simple… that car perfect in the shortcut is designed to get in the mud.

If you are going to make any changes, you have to make sure that the decisions you are taking is right. To do that collect all the necessary information from the reliable source and try to be very attentive to what is happening around you. You have to stay calm and do not react quickly to each of the news that comes to your ears. Before switching your initial plan to others, you must be understanding the stock market very well. Otherwise, it could turn out to be a wrong decision and you will lose your money.

Ending with a positive thought:

Those were the remedies that I thought will be so effective for them who know very little about what is share market and how it works for beginners. And for them who have the capital but don’t know how to start investing in stocks. finally, part of the recipe for the success of your investment lays on training and constant learning. Take advantage of the opportunities that exist in the share market, the various business platforms that there are to learn. Get knowledge from blogs like this, videos and tutorials on YouTube, articles, etc.

If all this topic of how to invest successfully in the Stock Market catches your attention you can share this article to your friends. And if you like to learn more about what is share market and how it works for beginners, the Stock Exchange constantly provides training. Good luck!!

About Jhonny

My name is Jabedur Rafique Jhonny a natural born Blogger.

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