Is Stock Market a Hot Market these days? And you want to Buy Stocks for Investment Purpose or Trading Purpose, Right? But don’t know the process of getting into the stock market! Nothing to worry about, we got you!
But Let me Tell You An Interesting Fact first. Do you know that you can take a loan against the shares that you hold in your Demat Account as security? Yes, it is possible to take a loan against the shares that you hold in your demat account. But, of course, there is more to that, but you can see the benefits of buying shares and holding them into your Demat Account.
This article will tell you everything you need to know about how to invest in the Stock market.
In order to invest in the stock market, you need to have a Demat Account. Let’s understand “What is Demat Account ?” and How it is useful to us?
Table of Contents :-
What is a Demat Account?
Let’s take an example here: When you have some money in your hand and want to keep it safe and sound, where do you go? The Bank right! Because you know that they will protect your money by opening an account where your money is stored. And also give you the ability to deposit or withdraw your money anytime. In exchange for this they’ll charge you an annual maintenance fee. And to open this account, you first choose a bank that you trust the most and find convenient to use.
Then, you need to have your PAN card and also other Identity proof that you are a legal citizen of this country. And after this, you can easily open your bank account and continue to use it as long as you want. So your money will be kept safe even after a decade.
Stocks and DEMAT account
In the same way, when you need to buy shares from the stock market like NSE and BSE, you open a Demat Account. Since you cannot buy shares directly from stock exchanges like NSE or BSE, you need a stockbroker and Demat account to do so. With the help of a Demat Account, you can Buy, Sell and Even Hold Shares for years or decades.
The word “Demat” stands for Dematerialize account. In the Early days of stock markets, people used to have physical contracts when they bought shares, including wastage of paper and red-tapism. It also affects the record-holding capacity as paperwork increases. So, when the new digital era comes, “Demat account” are introduced, through which you can easily do all the things like buy, sell and hold shares. The too – electronically, which is very efficient as compared to traditional ways because now the paperwork reduced, legitimacy increased, and it’s also convenient for a shareholder to keep track of his portfolio easily.
In India, two Depositories hold your Demat Account CDSL (Central Depository Services Limited) and NSDL (National Securities Depository Limited). By using your Demat account, you not only can buy, sell and hold stocks, but you can also do the same with your other investments like ETFs, Bonds, Commodities etc.
What is The Eligibility For the Demat Account?
The eligibility criteria for Demat Account is not so much complicated. You just need some Common documents that are essential for applying Demat Account.
1) Your Age should be 18+ and if it’s not, then you can still buy, sell and hold shares by opening a Demat and trading account at a brokerage in the name of a minor by the natural guardians (like parents) or the court-appointed guardian.
2) You must have a PAN(Permanent Account Number) card.
3) You will need an Address proof document like (Driving Licence, Passport etc.)
4) You Must be a Citizen of The Nation of which Demat you are trying to get.
How to Apply For a Demat Account?
The Big Question! How can I apply for a Demat Account? If you have read the above section and clear with all the points that are mentioned, then you can continue further. You first have to select a Stockbroker who is registered in the Stock Exchange market(NSE or BSE in India) regulated by SEBI(Securities and Exchange Board of India), which authenticates the broker. Stock Broker is. Basically, there are many good Stock Brokerage firms in India like Zerodha, Upstox, Groww, Share khan, ICICI Direct, 5 Paisa etc.
Now that you have selected a Stock Broker. A stock broker that you find flexible and convenient, you can go to their website or download the mobile application. Register yourself and upload the documents required by them step by step. Then within 24hours, your stockbroker will activate your demat account and will send you the details of your demat account. Then you can log in to the website or open the mobile application using your credentials, and there you go! You’ll now be able to buy shares, commodities, ETFs, Bonds etc.
How To Purchase stocks?
Congratulations! If you have reached this far then, you are on the right path. To buy or sell a stock, you first need to know the timing of your country’s stock exchange market, when does it open, and when does it close?
(Indian Stock market timing is 9:15 am to 3:30 pm, American Stock Market timing is 9:30 am to 4:00 pm)
Now to buy your first stock, you should look for a fundamentally strong company within your budget.
1. After you select the stock you want to buy, add money to your digital wallet. Do it via the app or website to add money from your bank account.
2. Now proceed forward by opening the Stock you want to buy. There you will get the option to buy a stock, click on that “buy” option. And now you are done!
Your order to buy the share has been placed. Always remember if you have placed the order within the stock market timing, your order will get get executed immediately. But if you have placed an order in the post-market timing, which means when the market is not open, then your order will be placed immediately but will get executed when the market opens.
Let’s sum up what we read above and try to comprehend all of it.
You cannot buy shares directly from a Stock Exchange. You need to buy them from a Stock Broker, which acts as a mediator between clients and the stock exchange. In order to buy shares from the stock market, you need to have a demat account. That enables you and provides you authority to buy, sell and hold shares.
To Open your Demat account, you need to contact a stockbroker; there are plenty of stockbrokers available. In India the big names are Zerodha, Groww, Upstox, ICICI Direct etc. Make sure to contact an authorized stockbroker, a stockbroker authorized from Stock Exchange Markets like BSE(Bombay Stock Exchange) or NSE (National Stock Exchange) regulated by SEBI (Securities and Exchange Board of India).
See and compare the charges and costs by different stockbroker firms(Charges may vary). You will need a PAN card and Address proof like a driving license, passport etc. That too only for authentication. Select a stockbroker and then apply for a Demat Account with the help of them. Upload your required documents, and then within 24 Hour, you will get your demat account number with credentials.
Now you can buy or sell shares from the website or app provided by your stockbroker and continue your journey of Buying and Selling stocks.
As a beginner, I recommend you to use the Groww app, which is easy to use because of its friendly Interface.
Do you still feel confused? Don’t worry; we got you! Comment Below, And we will reply to you within 24 hours or Just Hit us with a DM on Instagram @capitalistcabin. We would love to help you. Till then – We would love you to read our Personal Finance blogs!
Do tell us in the comments which stock you want to buy first? Happy Investing :)!