As per the Reserve Bank of India (RBI), the net household savings are currently around 5.3% of the Indian GDP. It shows that there are many Indians who are now prioritising increasing their net savings. However, you should know that every rupee that you have saved also loses its value to inflation.
Investing it in the share market not only allows you to retain its value but also earn returns on it. If you are wondering, ‘Can I invest in share market from home?’, the answer is yes. In this blog, we will understand how to invest in share market from home.
Why Invest Idle Money in the Share Market?
Saving money is an excellent way to gain financial stability, security, and freedom. Saving provides a safety net for major life goals and unexpected events. Most Indian banks, however, offer only 2.5%-3.0% interest on savings accounts, whereas inflation stands at 5-6%. It means every year your money loses its value. Here are all the reasons why you can consider investing your money in the share market:
- Funds you are not utilising lose their value since the savings accounts offer an interest rate of 2-3%, while inflation is at about 5-6%, which reduces the purchasing power.
- Investing will make your money grow through returns that can overcome inflation in the long run.
- The only way to compound is by investing, and even a little sum can turn into a lot of money with the right strategy.
- Investment helps in long-term objectives such as retirement, home purchase, or the education of children.
- Balanced investing minimises the risk, and you can keep emergency cash and invest the excess.
Why Invest in the Share Market?
The Indian share market is currently the fourth-largest market globally, with a capitalization of over $5 trillion. BSE’s total market cap hit $4 trillion in November 2023 and then, within just six months it soared past $5 trillion. It means that the share market offers a platform to grow your money quickly and easily.
- Traditionally, stocks have provided better long-term returns compared to most asset classes.
- Investment in share market helps you overcome inflation and build wealth at a higher rate.
- SIPs and compounding can increase small sums of money considerably.
- You can invest in the share (stock) market from the comfort of your home.
- Stocks are liquid investment vehicles, which means you can easily buy and sell them.
How to Invest in the Stock Market from Home?
Here is how to invest in the stock market from home as a beginner:
1. Understand What the Share Market Is
The share market is a place where individuals can buy and sell publicly listed shares of companies. When you purchase a share, you own a small portion of that company. If the company grows, the price of your share also increases. If the company performs poorly, the price of your share may drop. What this means is that your investment moves with the performance of the company whose shares you buy.
2. Learn the Basics of Investing
It is not just stocks or equities that are traded on the stock exchanges. You can also invest in the following:
- Bonds
- Mutual funds
- Systematic Investment Plans (SIPs)
- Exchange Traded Funds (ETFs)
Similarly, returns are not the only way to build wealth. Many companies also provide dividends, which are a portion of the profit that a company shares with you directly. This is why you must first understand how the share market works.
The Stock Exchange is an intermediary that connects buyers with sellers. The two main exchanges in India are the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE).
3. Open a Demat and Trading Account
Some of the terms that you will come across every day are:
- Demat account: A Demat account holds your shares and equities electronically. The bought and sold shares are directly exchanged from the demat account.
- Trading Account: A trading facility facilitates the exchange of securities (Shares, bonds, mutual funds, and more) from one account to another.
You must first open a Demat account with a depository participant (DP), like Central Depository Services Limited (CDSL) and National Securities Depository Limited (NSDL). Next, open a trading account with a SEBI-registered stockbroker. There are many online platforms that will help you open a trading and Demat account in just a few minutes. You can complete your KYC online by uploading your documents.
4. Add Money to Your Trading Account
Demat and trading accounts have simplified stock market investing in India. You can buy securities from apps and web portals from the comfort of your home. To invest, you must first add money to your trading account, select a stock, and place an order. Once the transaction is executed, the stock units will be added to your Demat account.
5. Monitor and Adjust
The share market is inherently volatile. Both local and global trends directly impact the price of the stocks. This is why monitoring your portfolio is important. You must also adjust it to the changing and evolving trends. Diversify and rebalance your portfolio every 6-12 months, as it helps you reduce the risk your portfolio is exposed to.
Common Mistakes Beginners Must Avoid
Here are the tips you can follow to ensure that your portfolio is adjusted for risks and returns:
- Following random tips: Avoid taking stock advice from friends, social media, or influencers without understanding the rationale behind it. This usually results in poor decision-making and losses.
- Panic selling during dips: When the market goes down, new investors may panic and sell their stocks at a loss. Be patient, as growth is always built in the long term.
- Not researching: Making investments without studying the fundamentals of a company, the business model, or its financial stability is a significant mistake that can lead to losses.
- Over-diversification: Although diversification is desirable, it is counterproductive to put money in many unrelated stocks or mutual funds and dilute returns.
- Holding excessive money in idle form: The presence of excess cash or all savings in low-yield fixed deposits will restrict the long-term creation of wealth.
Conclusion
Investing in the share market from home is easy, simple, and accessible to all. All you need is a Demat account, basic knowledge, clear goals, and discipline. Start small, be patient, and always make decisions based on trusted sources of information. With time and practice, you can grow confident in your ability to build wealth and secure your future.
Another way to start a safe investment journey is by taking advice from a professional share market advisor. Stock investing is vast, and having an advisor like Equentis on your side ensures that it is safe and rewarding. Consult with our expert professionals to grow your wealth faster and safer.
Disclaimer Note: The securities quoted, if any, are for illustration only and are not recommendatory. This article is for education purposes only and shall not be considered as a recommendation or investment advice by Equentis – Research & Ranking. We will not be liable for any losses that may occur. Investments in the securities market are subject to market risks. Read all the related documents carefully before investing. Registration granted by SEBI, membership of BASL & certification from NISM in no way guarantee the performance of the intermediary or provide any assurance of returns to investors.
FAQs
1. Can I start investing from home without a laptop?
Yes, you can invest in the share market via your smartphone, tablet, PC, or laptop. You will also need a stable internet connection and a Demat and trading account.
2. How do I choose my first stock?
Begin with investing in companies with good fundamentals, stable income, good governance, and stable long-term performance.
3. Is it worthwhile for beginners to invest in gold or stocks?
They can both be included in a balanced portfolio, with stocks providing greater growth opportunities and gold providing stability in times of market volatility.
4. Is it more advisable for beginners to invest long-term?
Yes. Long-term investing is less risky, it is not emotional, and it also has the advantage of compounding.
5. What can I do to prevent losses as a beginner?
Researching prior to investing, diversifying intelligently, not listening to rumors, being patient, and checking your portfolio on a regular basis are some ways to avoid losses as a beginner.
