If you are afraid of stock market and the complexity that it involves then don’t get into it before you learn about those complexities. Keep your investments as simple as possible. If you don’t understand something in the stock market then make a conscious effort to learn and play the game. It is very simple game; there are many terminologies that the stock market world presents you. You need not be scared of it, when I can invest and make money I think anyone can. This is what I have learnt in years after I started investing in the year 2006, it is been three years now and I have made decent profit. (Agreed that, I have had my downfall but overall it was a good 3 years.)
If you know basic mathematics and if you are disciplined then you can make money in stocks. Simple mathematics like multiplication, addition, subtraction, division and the basics of trading like buying, selling, giving commission is all that you require to master the game. Don’t concentrate on the things that scares you, even I don’t know many things and I am glad about it. The lesser I know the better I can concentrate on it. I don’t try to learn all the things under the sun nor do I need them. I think that is a better approach. Just concentrate on simple things. For example, you can just buy the stock, hold it and sell it. Is this a very difficult thing?
You can buy a stock say XYZ at Rs.10, hold it for some time (as long as you want) and once its value appreciates to say Rs.12 sell it. Isn’t this a simple thing? You can actually do this in the stock market. What is so difficult in it? You can’t have the physical shares as all are in electronic form, the shares get transferred from someone’s demat account to your demat account. It is as easy as transferring money. If you know how the transfer of money works then this is no different. Now there is a broker who helps you buy the shares from some person who is willing to sell. You have to pay the broker commission. Depending on the broker you have selected you will be paying the commission.
Stock market is not very complex as most of you feel, it is just another market where in people buy and sell and some make money and some lose money. if you are disciplined and methodical then I am sure you can reap benefits. Just stick to a plan as to how to invest in stock market, analyze the stocks and plan when to buy the stocks in what range and when to sell the stocks i.e. in what range. If you do this then you will reap benefits.
For the first timers, when you start with something there is all the possibility that you will fail so don’t lose your cool and dishearten yourself that you are losing money. A clever guy will not invest more money; he will use very little money to start with say Rs.100. Yes I said correctly, Rs.100, you can buy only one share as well. My first purchase was for 25 shares and it cost me Rs. 350 and I paid a brokerage of Rs. 25. I have had my share of mistakes, but that did not stop me from investing. If you don’t fail then you are bound not to see success. So don’t be scared of the stock market, make a bold move. Invest in the stocks.
All the best.
I think the only thing they need to know is brokerage for the buying and selling so that they know at what margin to sell.
And I would suggest avoid intraday trading till your familiar with basics first.
@Sudhix : Yeah that is right.
Good to know that as a beginner yourself, you are giving some good pointers to others. I appreciate that.