Learn about stock market with an aid of questionnaire;
P.S. – I have tried my best to avoid technical jargons to make it reader friendly. And one more thing, this answer is especially for laymen, so professionals please step aside.
Everybody on the earth have a deep urge to get rich. And hearing about, how one turned thousands into millions overnight? And rags to riches stories in stock market raise the curiosity of people in stock market and its strategy to get rich in a short span of time.
Truly speaking, technically there are no ways to earn money in short timeline but luck by chance, many also earned in short span.
Why you said “luck by chance”?
If there were any flawless stepping stones to get rich in short span then why aren’t all the person investing in stock market achieved it?And why aren’t any short term trader topped the Forbes’s list ? Weather he is Bill Gates, Mark Zuckerberg, Warren Buffett, Carlos Slim, Jeff ross or Peter Lynch, all of them created their wealth by just relying on one or bunch of reputed stocks and all of them topped the list.
Is there any perfect strategy to earn in stock market?
As I said there's no perfect strategy for short term trading but there are some strategies which guarantees success in long run.
Then why most of the people fails in long run, even if it guarantees success?
Due to lack of patience and discipline, investors got caught in short trading and so are not able to sustain in long run.
Is there any example, who succeed in long run?
Warren Buffett, Peter Lynch, Charlie Munger and many more are some known example who benefited from long term.
Is there any example of any “Aam Aadmi” (normal person)?
Yes, I know a person back in 1980s who invested 10,000 rupees in Wipro company and now after 35 years it turned into 535 crores. Yes, not thousands of lakhs, it's crores. His name was is Mohammad Anwar Ahmed.
Read the full story. http://stock-market-insig
Why you started with the behaviour of investors rather than basics of stock market?
There are many professionals, having a deep knowledge of investing but still they are struggling financially. Opposite side, I also met many dumpster (tenth pass or so) who invest wisely and are financially fit.
Then what is the hunting tool?
Determining your market behaviour is the substantial step to equity investment and this is the step where most of the investors lose momentum. Therefore before serving you the basic knowledge, I served you with behavioural part of investing.
Now let's look at the basics of stock market investing with the aid of questionnaire.
Why should I invest ?
One of the most compelling reasons for you to invest is the prospect of not having to work your entire life.
Where should I invest ?
As a rational being, one will always invest in the source, where s/he can gain maximum return.
Which source of income has maximum return ?
It has been observed that stocks with good fundamentals are considered one of the best investment avenues.
Historically, investment in equity stocks has given phenomenal returns amongst all the other asset classes if investment was done with discipline, patience and with long time horizon.
Statistically, over a long period of time, equity offered the maximum return to investors ranging from 15% to 20% whereas fixed income securities ranges from 9% to 12%.
Where can I buy this miraculous investment vehicle?
On stock market.
What is stock market?
A place where exchanging of stocks took place.
What place?
In past, there was many tangible places where exchanging takes place with an outcry system but with the advent of technology, all the transaction are executed electronically. So, now stock market exist intangibly.
What does “exchanging” includes?
Buying, selling and issuing of shares are termed as exchanging.
Why issuing?
There are two types of market, primary and secondary. In primary market, shares are issued by company and in secondary market shares are transfer between investors. Take it other way, shares are created in primary market and shares are transfer in secondary.
Can I invest in primary market?
Yup, everybody can invest in primary market. Last year CCD issued shares to public, I too invested (still regretting).
What about secondary market?
It is the place where daily trading of shares takes place. It is also known as stock exchange. It is the place where all the people who want to understand the basic of stock investing are dying to invest. What more to say, it is the place where you can hunt for stocks to get rich.
How many types of stocks are there?
There are many types depending on the basis; nature, sector, penny, bluechip....... etc
How can I start investing?
Contact to a stock broker and open a account with them. Rest they will guide you how to start investing.
Who is broker?
A person who acts as a intermediator to exchange shares.
Are there any types of them?
Yup, brokers are of 4 types; institutional, retailer, discounted, individual. All of them should be registered with stock exchange board.
What are differences in them?
Institutional broker only work for big financial companies, who buy and sell shares in bulk. Rest three types works for individual investors.
What is difference between rest of three?
Retail broker gives financial advise where as discounted brokers doesn't but the charges of latter is less than former. Individual broker are the individual person who helps peoples to buy and sell but due to risk of fraud, nobody execute through them. Now they are almost extinct. Retail brokers can also further divided into bank and non bank.
Is it necessary to have a broker for trading?
In secondary market, it is compulsion rule to trade through a brokers but in primary market you can also directly buy the shares by investing through DRI and DSP plans.
What are these plans?
Holy crap!! This doesn't form the basics of stock investing. Leave it behind.
Which “account“ do we need to trade?
There are three types of accounts needed to start trading stocks; Demat, trading and margin. Some banking retail brokers provides 3 in 1 account service.
Is there any book, which gives some good insights into stock market?
As a layman, you will not grasp anything from any books, weather it is recommended by anyone below or above the answer or not. Google is enough to learn the basics of stock market. Personally speaking, I have read many books but what I get from google is incomparable. Still I would also like to recommend you a book, not for stock market basics but for financial literacy.
What is financial literacy?
Financial literacy is the ability to understand how money works in the world: how someone manages to earn or make it, how that person manages it, how he/she invests it (turn it into more) and how that person donates it to help others. It'll lay a firm foundation for your equity investment.
Hey! You forget to say the name of the book.
Oh, yeah. Rich Dad Poor Dad by Robert Kiyosaki. I'm not having any affiliation or getting any extra money for promoting it. From the core of my heart, I really admire this book.
Is there any online site, where I can learn about stock market?
There are many, but I'll not suggest them, not even mine. Best way which I personally uses, to learn about stock market is go to the google and search your query, a page full of links will appear, now chose top 4-5 links and open them in new tab (appears with long press on links). Read all the articles and enrich your knowledge.
Why are you suggesting this method instead of any particular site?
Google analogy finds the best pair for the readers query keywords whereas articles are not written with your query point of veiws. So former will be more useful to solve your query.
How much money would I need to start investing?
Any amount will work. Many brokers offer services of nominal balance trading. However some have criteria of 5k or 10k minimum balance.
What is the legal age requirement?
In India 18 and in US 18 or 21 (depending on the states).
Is there any way to invest in stock market before turning 18?
Yup! I personally used this way to invest when I was <18. Persuade your parents or anyone (who have trust in you) to open an account on behalf on them. Get the credentials, and start investing.
I'm 18 year old, should I start investing now or wait for some more time to gain some knowledge about stock market?
Experience is the best teacher. More you interact with market, more you will understand about it. So, just start your trading with some nominal amount and learn the tactics of market. Experience cannot be gained from books.
Is stock market gambling?
Technically, it is not gambling but certain behaviour of the individual investors makes it gambling. Google the rest.
Is there 50-50 chance to gain or lose in stock market?
There is 100% chance to gain if the right strategy is executed and 100% chance to lose on wrong strategy. But always remember risk is an inseparable element of all commercial activities. You cannot eliminate it but can minimize it. You can read more about it under the concept ‘Margin of safety’ given by Benjamin Graham , in Intelligent Investor.
(Credit - http://stock-market-insig
P.S. – I have tried my best to avoid technical jargons to make it reader friendly. And one more thing, this answer is especially for laymen, so professionals please step aside.
Everybody on the earth have a deep urge to get rich. And hearing about, how one turned thousands into millions overnight? And rags to riches stories in stock market raise the curiosity of people in stock market and its strategy to get rich in a short span of time.
Truly speaking, technically there are no ways to earn money in short timeline but luck by chance, many also earned in short span.
Why you said “luck by chance”?
If there were any flawless stepping stones to get rich in short span then why aren’t all the person investing in stock market achieved it?And why aren’t any short term trader topped the Forbes’s list ? Weather he is Bill Gates, Mark Zuckerberg, Warren Buffett, Carlos Slim, Jeff ross or Peter Lynch, all of them created their wealth by just relying on one or bunch of reputed stocks and all of them topped the list.
Is there any perfect strategy to earn in stock market?
As I said there's no perfect strategy for short term trading but there are some strategies which guarantees success in long run.
Then why most of the people fails in long run, even if it guarantees success?
Due to lack of patience and discipline, investors got caught in short trading and so are not able to sustain in long run.
Is there any example, who succeed in long run?
Warren Buffett, Peter Lynch, Charlie Munger and many more are some known example who benefited from long term.
Is there any example of any “Aam Aadmi” (normal person)?
Yes, I know a person back in 1980s who invested 10,000 rupees in Wipro company and now after 35 years it turned into 535 crores. Yes, not thousands of lakhs, it's crores. His name was is Mohammad Anwar Ahmed.
Read the full story. http://stock-market-insig
Always remember, patience, discipline and time acts as fertilizers on a land of investment to grow a fruitful wealth in future.
Why you started with the behaviour of investors rather than basics of stock market?
There are many professionals, having a deep knowledge of investing but still they are struggling financially. Opposite side, I also met many dumpster (tenth pass or so) who invest wisely and are financially fit.
What I want to point out is that, knowledge is not the only armour to hunt the stocks in the battlefield (stock market).
Then what is the hunting tool?
Determining your market behaviour is the substantial step to equity investment and this is the step where most of the investors lose momentum. Therefore before serving you the basic knowledge, I served you with behavioural part of investing.
Now let's look at the basics of stock market investing with the aid of questionnaire.
Why should I invest ?
One of the most compelling reasons for you to invest is the prospect of not having to work your entire life.
Where should I invest ?
As a rational being, one will always invest in the source, where s/he can gain maximum return.
Which source of income has maximum return ?
It has been observed that stocks with good fundamentals are considered one of the best investment avenues.
Historically, investment in equity stocks has given phenomenal returns amongst all the other asset classes if investment was done with discipline, patience and with long time horizon.
Statistically, over a long period of time, equity offered the maximum return to investors ranging from 15% to 20% whereas fixed income securities ranges from 9% to 12%.
Where can I buy this miraculous investment vehicle?
On stock market.
What is stock market?
A place where exchanging of stocks took place.
What place?
In past, there was many tangible places where exchanging takes place with an outcry system but with the advent of technology, all the transaction are executed electronically. So, now stock market exist intangibly.
What does “exchanging” includes?
Buying, selling and issuing of shares are termed as exchanging.
Why issuing?
There are two types of market, primary and secondary. In primary market, shares are issued by company and in secondary market shares are transfer between investors. Take it other way, shares are created in primary market and shares are transfer in secondary.
Can I invest in primary market?
Yup, everybody can invest in primary market. Last year CCD issued shares to public, I too invested (still regretting).
What about secondary market?
It is the place where daily trading of shares takes place. It is also known as stock exchange. It is the place where all the people who want to understand the basic of stock investing are dying to invest. What more to say, it is the place where you can hunt for stocks to get rich.
How many types of stocks are there?
There are many types depending on the basis; nature, sector, penny, bluechip....... etc
How can I start investing?
Contact to a stock broker and open a account with them. Rest they will guide you how to start investing.
Who is broker?
A person who acts as a intermediator to exchange shares.
Are there any types of them?
Yup, brokers are of 4 types; institutional, retailer, discounted, individual. All of them should be registered with stock exchange board.
What are differences in them?
Institutional broker only work for big financial companies, who buy and sell shares in bulk. Rest three types works for individual investors.
What is difference between rest of three?
Retail broker gives financial advise where as discounted brokers doesn't but the charges of latter is less than former. Individual broker are the individual person who helps peoples to buy and sell but due to risk of fraud, nobody execute through them. Now they are almost extinct. Retail brokers can also further divided into bank and non bank.
Is it necessary to have a broker for trading?
In secondary market, it is compulsion rule to trade through a brokers but in primary market you can also directly buy the shares by investing through DRI and DSP plans.
What are these plans?
Holy crap!! This doesn't form the basics of stock investing. Leave it behind.
Which “account“ do we need to trade?
There are three types of accounts needed to start trading stocks; Demat, trading and margin. Some banking retail brokers provides 3 in 1 account service.
Is there any book, which gives some good insights into stock market?
As a layman, you will not grasp anything from any books, weather it is recommended by anyone below or above the answer or not. Google is enough to learn the basics of stock market. Personally speaking, I have read many books but what I get from google is incomparable. Still I would also like to recommend you a book, not for stock market basics but for financial literacy.
What is financial literacy?
Financial literacy is the ability to understand how money works in the world: how someone manages to earn or make it, how that person manages it, how he/she invests it (turn it into more) and how that person donates it to help others. It'll lay a firm foundation for your equity investment.
Hey! You forget to say the name of the book.
Oh, yeah. Rich Dad Poor Dad by Robert Kiyosaki. I'm not having any affiliation or getting any extra money for promoting it. From the core of my heart, I really admire this book.
Is there any online site, where I can learn about stock market?
There are many, but I'll not suggest them, not even mine. Best way which I personally uses, to learn about stock market is go to the google and search your query, a page full of links will appear, now chose top 4-5 links and open them in new tab (appears with long press on links). Read all the articles and enrich your knowledge.
Why are you suggesting this method instead of any particular site?
Google analogy finds the best pair for the readers query keywords whereas articles are not written with your query point of veiws. So former will be more useful to solve your query.
How much money would I need to start investing?
Any amount will work. Many brokers offer services of nominal balance trading. However some have criteria of 5k or 10k minimum balance.
What is the legal age requirement?
In India 18 and in US 18 or 21 (depending on the states).
Is there any way to invest in stock market before turning 18?
Yup! I personally used this way to invest when I was <18. Persuade your parents or anyone (who have trust in you) to open an account on behalf on them. Get the credentials, and start investing.
I'm 18 year old, should I start investing now or wait for some more time to gain some knowledge about stock market?
Experience is the best teacher. More you interact with market, more you will understand about it. So, just start your trading with some nominal amount and learn the tactics of market. Experience cannot be gained from books.
Is stock market gambling?
Technically, it is not gambling but certain behaviour of the individual investors makes it gambling. Google the rest.
Is there 50-50 chance to gain or lose in stock market?
There is 100% chance to gain if the right strategy is executed and 100% chance to lose on wrong strategy. But always remember risk is an inseparable element of all commercial activities. You cannot eliminate it but can minimize it. You can read more about it under the concept ‘Margin of safety’ given by Benjamin Graham , in Intelligent Investor.
And if there's anything I can help you with, shoot a comment below; I’ll read and respond to every comment. Also suggest any query not mentioned in the answer.
Great Post. Very Informative. Thanks for sharing. I have also written a similar blog post which you can find useful: http://www.tradebrains.in/new-to-stock-market-start-here/
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