Basics of Stock Market Explained in 2021

Stock Market

The Stock market is a type of investment market where people purchase shares of companies who are listed on the public stock exchange.

For beginners, this may seem quite strange and a huge time-consuming thing. But on a serious note, this is just a side business for which you don’t require any qualification to invest your money, all you need is proper planning and study of the market. 

The best thing about the stock market is that it is flexible for everyone, for example, what kind of job you are doing it doesn’t matter, whether you are young or old it doesn’t matter, you are earning a lot or doing a middle-class job it doesn’t matter at all. All that matters is you should have money that you can put in investment for some time.

You need not be a great businessman or a so-called investor to invest in the market or purchase shares. Anyone who invests for the first time becomes a part of great investors. Also, there are many stock market courses available that teach you how to invest.

Now, let us discuss some important points that are important and every beginner should study and know them before their investment.

What Comes Under the Definition of the Stock Market? 

You might have listened or read in the newspaper that there is a rise in the stock market or there is a downfall in the stock market. What does this mean?

When there is a rise in the stock market this means, the indexes have moved up, the stocks that come under that index have gained their value.

When the stock market comes down this means, the indexes have lost values and thus, the stocks within it have lost their value.

What Kind of Investor Are You?

After you have decided to invest in the stock market the next and the foremost thing that comes is what kind of investor you want to be.

There are many types of the investor which you need to know before starting with your first investment and figure out what kind suits you the best. Let us discuss each one below:

Online Brokers:

Brokers are of 2 types that are full-service or discount. Full-service brokers are the high-priced ones and as the name suggests they are available for every kind of investment may it be health investment or retirement investment. They only work for a high net valued person and charge high fees including a percentage of the transaction, the percentage of assets that they manage. Everyone cannot afford them.

Discount brokers are the ones who give the tool to the investor so that they can directly do the transaction. Discount brokers were rare in earlier times but today are most in number. 

Working Professionals:

 If you are working as an employee in any company you can start investing some percentage of your salary you are comfortable with, let say 2%. By doing this you can save a large amount of money for your retirement and future, and make your future safe.

You can gradually increase the amount when you become comfortable with 2% and your salary increases. This type of investment will surely benefit you if you invest for long periods.

Based on Commission and the Fees:

The commission is an important part of a broker’s job profile. Each broker charges a different commission as a fee for helping their customers. 

Some brokers charge a little while others charge a good amount. Some brokers seem that they do not charge anything but the reality is there is no charity organization in brokerage job.

If you purchase 3 shares of different companies then you would be charged 3 times. You must invest a decent amount to get a good profit, in small investments, there are chances of very little profit.

Mutual Funds Investor:

If you are a beginner in investing your money, this is the best advantage according to funds deposit. The reason is that the commission fees are constant, regardless of the amount you invest.

On the other hand, mutual fund charges a lot of fees annually according to the assets in the fund. The fee may range from 0.05% to 5% and sometimes 7-8%.

How does the Stock Market Work? 

The stock market is like a simple game of demand and supply.

As soon as the demand for any stock increases the supply also increases to meet the demand and the value of stock increases and the owner gets more money to expand his business. The stocks can be listed on any stock exchange, for example, the Bombay Stock Exchange from where the buyers can see the rate of stocks and the update about the stocks if any. 

In earlier times the buying and selling were done physically, but today through the internet where every solution is just a click away, one can sit at home relaxed and buy and compare stocks with each other.

Short-Term v/s Long-term:

Every investment has its pro and cons. May it be short-term or long-term. It depends upon one’s needs and the time for which he can invest his money.

Short-term investments are good when you want to achieve your financial goal within a short time. But this would not let you get much profit. Sometimes there is even a risk of market downfall which will lead you to loss.

While in long-term investments there are some risks involved because of the long duration the prices may go up and down. People can earn good profits too, but in the worst case, the stocks you bought might go too low to even imagine. This investment is not a good option for the ones who cannot wait for a long time and who don’t have patience. This is for the ones who can take risks with the hope of rewards.

How to Learn Completely About the Stock Market?

Today there are several ways to get knowledge about the stock market from basics to advanced as compared to the past when there were just some people who knew it completely.

Internet is a boon for today’s generation, we can get anything on it for free of cost. Many websites provide several articles on the stock market. We can see hundreds of videos uploaded on Youtube related to the stock market.

There are several courses provided by reputed institutes like The Thought Tree(T3) which will help you to learn stock market from basics to the advanced with practical knowledge as well. There is hardly any room for excuses about where to learn. Only dedication is required and that opens several ways to learn the stock market completely.  

Conclusion

The above-mentioned are some of the basic strategies that a beginner should keep in mind to start his first investment in the stock market. Investing in the stock market may seem a little tricky in the beginning but I assure you that after a few investments, may it be wrong or right you will gain a great experience from it for your future investments.

I hope you liked the article.

Happy investment to all the beginners reading this!

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