Read this to start investing in the stock market

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Jack and Jill went up the hill, to fetch a pail of water,
Jack fell down and broke his crown and Jill came tumbling after!

While for many this may be an innocent nursery rhyme, but some people will tell you that this is the story of the stock market. But, is the stock market really this scary? The answer is a clear NO. It is indeed an exciting place to be in if you understand the fundamentals clearly. So, if you are thinking of starting your stock market journey, you have landed on the perfect article.

What is the Indian Stock market? 

The Indian stock market comprises of two markets – primary market and secondary market.  

  1. The primary market is the place where a share is listed for the first time through an IPO (Initial Public Offer). 

  2. The secondary market is the place where the subsequent trading (buying or selling) of these shares (and other financial instruments) takes place such as a stock exchange. Majority of the Indian stock market trading takes place on two stock exchanges – BSE or the Bombay Stock Exchange and the NSE or the National Stock Exchange. The biggest USP of these order-driven markets is transparency. All the trade details (buy and sell orders) are openly displayed for all trading system participants and members. 

Now coming to the different products through which you can invest in the stock market before talking about stock market investment tips.

Stocks

The most common way of entering the stock market, stocks (also called shares) represent part ownership of a company. The one who holds the company’s share is called shareholders. Depending on the type of shares (equity, preference, etc.) one gets a series of entitlements – common or differential voting rights, dividend, etc.)

Mutual Funds

Mutual Funds are the current trending topic in the investment space. Mutual Funds pool in money from a group of investors and then invest the corpus in multiple instruments (which collectively form the portfolio). Different schemes have varied objectives (growth, capital appreciation, fixed-income, stability, etc.) and the mutual funds investment is made in line with the scheme’s objectives. SIPs (Systematic Investment Plans) have given mutual funds the power of 3A – accessible, affordable and attractive. 

Exchange-Traded Funds (ETFs)

Many people confuse ETFs with Mutual Funds. The reason for the confusion is that just like mutual funds, even ETFs pool in funds from several investors and use the corpus to invest in varied financial instruments – stocks, bond, gold, etc. However, the main point of distinction between ETFs and Mutual Funds is that the former is traded on an exchange throughout the duration of the trading day.  Hence, it is safe to say that ETFs combine the characteristics of stocks as well as mutual funds.

The next question is how do you go about buying these financial instruments? There are various mediums that will help you in this task-

  1. If you want to invest in stocks, you need a broker in your life. They act as intermediaries between the exchange and end consumers. Depending on your needs, you can choose between traditional (also known as full service) brokers or discount brokers. A good broker can make the mutual funds investment process smoother, faster and more lucrative. These intermediaries help complete all the required paperwork and formalities.  

  2. For mutual funds investments, you can either reach out to:
  • online aggregators who give access to schemes from multiple fund AMCs under one roof, or
  • opt for Direct investments. Some fund houses allow investors to directly invest in their mutual fund schemes through their mutual fund investment app.

Stock market investment tips

Choosing the right partner for your financial needs is winning half the battle. You need to choose someone who is competent, technologically robust and makes your investing experience effortless and fruitful. Niyo, one of the fastest-growing mutual fund investment app in the Fintech space in India can be your perfect partner. It offers a smart, safe transparent and convenient banking experience which helps you make the most out of your money.

Life is not a straight line – but a combination of UPs and DOWNs. So, how can stock markets be any different? The idea should be to maximise the Highs and minimise the Lows. And when you are with the right partner (life or financial), the journey becomes worth all the effort. So, if Warren Buffet could make his empire from scratch with the right stocks, why shouldn’t you give it a shot?

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