How To Buy Stocks: Step-By-Step Instructions For Beginners
If you want to invest in the share market, then here's your complete guide on how to buy stocks. From analyzing company shares to purchasing the stocks, everything that a beginner needs to know
Investing is never an easy job. However, those who have created assets with their investments, surely know about the benefits. For years, the Stock Market has been one of the most active investing options. Daily traders to long-time investors, people make great profits out of it, but there are also people who have lost lakhs for not having proper knowledge about the company before their respective investments. If invested with the detailed market knowledge and research, one can earn great profits. And these profits might range from 10 per cent 200 per cent (depending on the company profits). If one wants to ride high on the bull market, then they need to study the company and its financial reports well. In this article, we take you through a complete guide on how to buy stocks.
Check out how to buy stocks:
1. Company Track Record
The company which stays away from controversies usually performs well and its shares are stable. Make a list of all the A-lister companies and analyze their track records. If these companies often get warned by RBI, SEBI or other government regulatory bodies, then the management might be ignorant about its irregulations. This will eventually affect future performances and affect the investors. Good companies always mandate themself to be in the good books of the regulatory bodies, thereby following the rules and regulations. Thus, avoid companies that are involved in any kind of fraud/scam activities. You can do the research on the internet simply by searching.
2. Management Track Record
If the owners of the company are not stable, one can not predict the future. In order to pick a stable stock, one needs to know about the management. Thus, study about company owners, their qualifications, their contributions in production and execution matters, how are the relations between all the partners. Missing owners can also hint at something being wrong within the management. As an investor one needs to know if the company owners can use your invested money for anything progressive or good. Choose companies that are debt-free and also the ones wherein owners do not have mutual disputes. The fewer chances of bankruptcy mean greater its future.
3. Research Company Assets
A good investor always keeps knowledge about how the company uses its assets. How much investment and labor the company spends on the new assets. How do these assets help companies grow, know which all assets the company is currently? Whether it wants to make new assets or interested in selling. If the company keeps on selling its assets, then it must be dealing with losses. This surely is a red signal for the investors, do proper research.
4. Sales + Profit Margin
Scroll through the business websites and news portals to know if the company has been working in a profitable environment. For a long-time investor, it’s crucial to know if the company sales and profit margins are in a healthy ratio. The profit margin is a ratio of a company’s profit (sales minus all expenses) divided by its revenue. The profit margin ratio compares profit to sales and tells you how well the company is handling its finances overall. It’s always expressed as a percentage.
5. Return On Capitale
All the big companies issue their financial profit, sales and losses in their quarterly and yearly results. Determine how much of the investment has been done by the company on its assets and how much it makes through the sales and profits. Compare if the company is actually making any profits after cutting down its investment costs.
6. Customer Satisfaction
One of the best ways to learn about the company being in profits and its future stability is by studying customer satisfaction. If the company has a strong product, then its future projects will also do well. New companies with great investments and marketing plans usually work well for a few months or a year. Eventually, the company needs to survive on its product/ service value for the long run. Thus analyze how customers are reacting to the products/ services of the company.
Checklist before buying stock:
- Sign up for a Demat account
- Verify identity, bank account and other details with the trading site (broker site)
- Create Trading Account/Brokerage Platform (As you can’t directly purchase shares)
- Get trading application/ Login on the website
- Start trading
Steps to buying stocks on Zerodha:
- Log in to the Zerodha Kite App/ Website
- Add funds to your trading account
- Add desired Options to your market (list of companies)
- Place an order on the stock with your price
- Click the buy option
- Check for the execution of the order
- Once an order is completed, you will receive an official email from Zerodha as well as NSDL
Steps to buying stocks on Angel Broking:
- Open Angel Mobile App
- At the bottom click the Login to Trade option
- Tap on the Menu option
- Click the Trade
- Click on the stock you want to buy
- Click on the Buy option
- Enter the price details and continue
- Click the Submit button
- Once your purchase is done, the shares will show in holdings
If you find this information helpful, then do let us know. For more such updates, stay hooked on to The Live Mirror.