Buy or sell shares in stock market

How to buy shares in Indian Stock Market?

Simple steps to buy or sell shares in Indian Stock Market.

Prerequisites

1. You need to have a DEMAT and Trading account – Contact any banks or stock brokers such as IndiaBulls, India Infoline , Reliance Money etc.
2. You need to have a PAN number. – Check out my earlier blog on PAN.
3. You need to have a Bank account, preferably in the same city and with online transaction facility which makes life easier.

Steps

1. Once you have a DEMAT or Trading account, you will be given an online access for buying or selling shares.
2. Select the stock or shares of the company you want to buy.
3. Decide on price and quantity of the shares.
4. Transfer money or allocate money to your trading account from your bank account sufficient enough to buy the shares and pay for additional charges such as brokerage, commissions and any other charges.
5. Using online account , put an order to buy the shares. This will be an easy process as you can check current market price – share value of the company and send the order to stock market using simple user interface.
6. Once ordering is done, you will receive a confirmation of your order and once your share is bought, you will get a confirmation of your trade.
7. After a couple of days, the share will be credited to your account.
8. If you want to sell, you can use same online account and specify the number of shares you want to sell and put the order.
9. Once the order is executed, you will get an online confirmation for this and amount will be credited back to your account within 2-3 days.
10. You can transfer money back to your bank account or use the money to buy some other shares.

Tax implication

If you are transacting in stock market, and if are buying and selling a particular share within an year, you need to pay 10% of your profit as a capital gain tax. If the interval between buying and selling is more than one year, you need not pay any taxes. The dividend obtained from the shares does not attract any tax. If there are any losses in a year, you can deduct the amount from any other capital gains (only) when calculating your taxes!!

Happy Investing ……….
Vinay

Stock Markets and Investing in stock market

According to some sources, only 8 % of the Indian population knows that there is something called stock market and only 4 % invests in stock market directly or indirectly.

During these times, investing in market may seem like a bad word. But historically there is not other investment vehicle that has given more return on investment that stock market. Ace investors enter the stock market during turbulent times and exit when they make good money during good times. There are lot of people who made huge money as well as there are more people who lost all they had. The people who made money are typically investors who spent time and energy learning about stock markets and investing in stock markets and people who lost money are those who just wanted to make quick money.

As any other job or business, there is no easy money available. You have to be patient, work hard, spent time and have sufficient knowledge about what you are doing. During initial years, you have to learn, invest and then earn.

It is very unfortunate that only very small percentage of people do this. So as a first step, here are some basics about stock market.

To invest in stock market, you have two main ways.

1. Invest directly in stocks.
2. Invest in Mutual funds which in turn will invest in stocks.

For investing in stocks, you have to have a DEMAT account and a TRADING account. DEMAT account is something like a bank account in which your stocks will be held. You need to pay/transfer money to your DEMAT account to buy shares. For opening a DEMAT and TRADING account, you need to approach a stock broker. He acts as a mediator between you and the stock market and buy/sell for you. There are lot of players like ICICI, HDFC, Indiabulls , etc which offer this service. They charge a certain percentage of your transaction as a commission or brokerage.

During this internet age, you need not go to a broker or bank for investing in stock market. All can be done online. Once you open an account, the broker will give you facilities such as trade online, transfer money online to and from your bank account to your stock market account – DEMAT/TRADING. You can get live information about the stock market from various websites including those services provided by the stock broker. You can get information about which stocks to invest, which of them are performing well and which are not and all the details and news about the stocks from lot of websites. So, investing in stock market has become very easy and less cumbersome.

For investing in Mutual funds, you need not have a trading account. Your stock broker/ any banks provide this service of buying or selling mutual funds. Nowadays, you can invest in mutual funds online also. But you have to invest through banks or mutual fund offices for the first time.
Now there is a mandatory requirement of PAN – Permanent Account Number for investing in Stock Market or Mutual funds. Read one of my earlier posts to know about PAN.

When you buy a Mutual Fund, the service provider will buy or invest in stock market in different stocks in the stock market ( there are some mutual funds which do not invest in stock market). The mutual funds are evaluated using the variation in the stocks it has invested depending on which it decides its NAV. When you buy a Mutual fund, a certain number of mutual fund units with that day NAV will be allocated to you.

So, if you take good decisions and consider a long term, say 5 – 10 years horizon, there is not other investment vehicle that has given higher returns which beats the inflation. But the catch word is long term and persistent non panicky investment decisions.

If you have not invested in stock markets, this is the right time. Start doing some research on stocks and start investing and start with a very small amount and grow as you gain confidence. Hard work always pays of. This is definitely not gambling unless you gamble with your money.

Check my other blogs to gain more information on stocks and tax implecations.

Cheers
Vinay

Tips to stay afloat in bad times

As anticipated by many people, its here ... India is starting to feel the effect of bad economic conditions which is prevailing all over the world. Started in US and spread like a wild fire all over the world, its affecting each and every person around the world. Job Losses, Less money in hand, depreciating assets, mounting liabilities are causing lot of worries to people. We have to take some effective steps to overcome this situation which is not appearing to last of couple of years.

Here are some tips which make you sail this troubled times without drowning.

1. Loans .... These will have snowball effect in these times. So, clear as much loans as possible. Avoid taking any loan.
2. Keep cash in hand. Delay any investment particularly related to risk prone sectors such as equity, real estate and commodities.
3. Gold and FD's are good investment options.
4. Try for prepayment of any outstanding loans and credit card balances.
5. Be ready with cash which can be deployed easily in case of trend reversal which may happen any time.
6. Don't even think of Job change. Cling on to existing jobs at least for another year in the mean time try to improve your skill sets and job expertise.
7. Try to create some income generating assets such as rental income, interest income etc.
8. Not a good time to buy or sell real estate and vehicles.
9. Don't plan for any expensive vacations.
10. Avoid expensive eat outs or entertainments.
11. Bring down house hold expenses by cutting down unwanted spendings.
12. And most important thing of all .. Don't panic .. Its all in the game ... Its like a cycle .. and conditions will and have to pick up and for India population which once was considered problem will definitely become an asset and growth story of India is not hoax... Its real and India will become the next super power and economic center point of the world and land of dreams.

Hope for the best and plan to make it even better.... :)