With the sudden hit of the pandemic last year threatening people’s jobs, many individuals have realized the importance of having multiple sources of income. Depending on only one job to support yourself can come with a big cost, the cost of losing everything. We want to highlight how you can start investing in the stock market to start earning passive income as a beginner.
The Buzzword That Has Acquired a Permanent Place in Our Culture – Crypto
With the rise of the use of Cryptocurrency and Dogecoin, online investing has now become more mainstream than ever. At MoneyBite, we want to encourage our readers to jump on the bandwagon and start investing, like millions of other people all over the world.
In this article, we’ll cover the basics of how to trade in the stock market to make money. If you have ever picked up a finance book to read or come across a finance blog you’ve probably heard of Warren Buffet. He simply defined investing as the process of laying out money now to receive more money in the future. The goal is simple – to make your money grow over time using different investment tools instead of letting it remain stagnant in your bank account.
The great thing is that passive income works for you while you sit on the couch and do absolutely nothing. It’ll also guarantee you a more financially secure future. However, it is important to keep in mind that some investments can be risky.
Decide What Type of Investor You’re Going to Be
Before getting started, it will be helpful to decide if you want to actively manage and monitor your money invested or if you want to be the type of person that invests their money and forgets about it.
What is The Stock Market?
Simply put, a stock market is a place where different types of instruments can be bought and sold. The two main stock markets in India are the National Stock Exchange (NSE) and the Bombay Stock Exchange (BSE).
How to Invest in the Stock Market?
It is not possible to trade directly on the stock market which is why you can go through either brokers or stock brokerage companies. If you’re a beginner with zero financial knowledge and a tight schedule, we recommend going through the online broker route to invest.
Follow these straightforward steps
- Open up a trading account with a broker.
- The broker will open a demat account for you which will hold the securities in your name.
- Your bank account is joined with the trading and demat account.
- Once your account is ready you can trade with your broker online or offline.
What Can You Invest In The Stock Market?
- Equity shares – They let you receive profits paid by the company in the form of dividends.
- Bonds come at a fixed interest rate and represent loans made by the investor to the issuer.
- Mutual funds pool money from various investors and invest it into different securities. They are great for beginners because they allow you to invest as little as 50-100 dollars per month as long as you meet the minimum requirements to open an account.
- Exchange Traded Funds (ETFs).
A Few More Things to Consider:
Decide What Level of Risk You Can Afford to Take
The level of risk that an individual can tolerate is called their risk appetite. This depends on various factors such as their age, goals in life, and how much money they have available at the moment.
Build a Diverse Portfolio
Don’t put all your eggs in one basket is very applicable when it comes to good investing practice. Diversification is the single most important thing that can save you from long-term financial losses. It simply means investing in a variety of different securities in different places. With stocks specifically, it is difficult to diversify your portfolio as a beginner as buying multiple stocks together might be expensive.
That is why mutual funds and EFTs (exchange-traded funds) add an advantage for beginners. They have a big number of different investments within the fund, making diversification easier.
Getting rich is a long-term game rather than a short-term trick. Make sure to set a budget, track your expenses and invest wisely. Set aside a fixed amount to invest every month so that you can build your portfolio gradually. With a little patience and studying, you can make money work for you instead of you working for money.