India’s investing population has jumped from 2.6 per cent in 2019 to 3.9% in 2021. While this number may seem insignificant, the rise in Demat accounts is staggering. "This, in itself, is proof of a massive growth inflection point that has emerged in capital markets in the past year, driven by enablers like the covid-era digital boom, progressive regulatory reforms, and a simple 5-minute KYC," explains Hiral Jain, Co-founder and CFO, Market Pulse Technologies, India’s first stock market super-app.
"In response, the industry is witnessing an expanding broking ecosystem with large format players fueling a parallel rise in technology and intelligence to foster rapid entry into markets. As a result, today, the share market is broader, more accessible, and transparent than ever before," she adds. Before delving into the details of investing in stocks, let's understand what an 'investment' means: Investing in stocks refers to buying shares of ownership in a public company, with the hope that the company grows over time, your shares become more valuable, and the possibility of making a profit if you decide to sell them.
While it sounds pretty simple, it certainly ain't. According to Hiral, youngsters are stepping into the market without the requisite knowledge and skills to support and sustain themselves. "Novice traders need a judgement-free, jargon-free, safe and friendly space to thrive in the markets, which can often be intimidating and dynamic to navigate," she says.
If you're a beginner planning to dip your feet in the share market, here are a few things you should bear in mind as you begin your journey:
Learn, Learn, Learn
For a beginner, self-education and skill-building are paramount. "Today, there is a bevvy of resources online as well as learning-based apps that can be relied upon, in addition to analysis and stock-broking apps that simplify your end to end journey. Teach yourself about money management and use the resources available to you to build your skills. Especially for the case of women entering the markets, it may be convenient or acceptable to rely on your spouse, father, brother or friend to manage your money. However, the sooner you cut this umbilical cord, the faster you will be on your way to independent, self-reliant, confident wealth creation," advocates Himal.
Stay True to Your Goal
First, plan your numbers. Figure out the amount you want to invest in markets. Look at your income, savings, expenditures, budgeting, contingencies, future goals and dreams. We are all privy to this mental mathematics that is a running commentary in our minds. Put those figures down on paper and make a real plan. "Know what you own and why you own it. If the market veers, this will act as your north star, so that you can evaluate if your reasons behind making a specific investment still hold. Keep an unwavering long-range view of your own goals, regardless of what the market is doing," she says.
Build Resilience Through Patience
Not enough can be said about just how much patience pays in the marketplace. According to Hiral, markets are built to rise, fall, and rise again—it is infused in their character. "Let’s not forget the market crash of 2008 or the disruption of 2020. Despite the panic and chaos surrounding these seemingly cataclysmic events, the markets bounced back, proving that no depression or low point is permanent. Understand the inevitable truth of these ups and downs, and focus on building resilience. If you’re good in the business, you’re likely to be right six times out of ten. But, don't expect it to be nine times," she explains.
Balance Out Your Emotions
Emotions and market decisions are a toxic combination. "Never be too invested in your first estimation of how you want things to be. Have a plan B, C and D, in place. Put down your own rules and guidelines that come into force during challenging times, so that you don’t have to make any crucial decisions in the middle of an emotional thunderstorm," suggests Hiral.
Baby Steps Take You a Long Way
Once you start learning the ropes, you can begin your investing journey with simple instruments such as SIP, mutual funds, and passive index funds—where the entry barrier is as low as INR 500 and there is no real need for you to actively tune into the market. Step by step, you can strengthen your knowledge of stock investments and trading. "It’s always sensible to find a reliable advisory to begin with, and then build one’s confidence. Make every effort to thoroughly understand the risks and return metrics. Take advice and get all the intel you need to make informed decisions. Be eager to learn from your mistakes. If you feel you’ve exited too early, remind yourself that markets are always throwing new opportunities to enter and exit at the right time. Let go of fear and trepidation and try again."