/How an investor can invest in the share market
InvestmentDecember 16, 2020

How an investor can invest in the share market

​How share investing works

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​How share investing works

One of the most recommended approaches to wealth creation is to invest smaller amounts in growth oriented investment products periodically. You can invest in stocks with the help of systematic stock investment tools provided by brokers. These tools help potential investors invest in an identified set of companies or themes or type of companies according to market capitalisation, ie. mid-, small- or large-cap. While shares can be volatile over a short period of time, investing in the right shares can help traders make quick profits.

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​What is required

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​What is required

To invest in shares, you must have a demat account and to trade (buy/sell) the shares on the exchange using the broker’s platform, it is necessary to open a trading account with the broker. Your, ie. the investor’s savings bank account must be linked to your demat and trading accounts. Note that demat and trading accounts are different.

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​You can go via these routes

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​You can go via these routes

Investors can login to the trading platform of the broker and register for stock SIP via any of the following:
Creating a bucket of 10-15 stocks and investing periodically.
Investing a particular amount proportionately in pre-defined stocks adhering to a theme.

Investors also have the option of not selecting a specific stock. So you can either specify the amount to be invested in each stock or the number of shares you want to purchase in each instalment.

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​Process to create stock SIP

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​Process to create stock SIP

You need to specify the investment amount, start date, end date and trigger date for the stock SIP. Trigger date is the date on which investment shall be made in the bucket for each instalment. On the trigger date, a separate order shall be generated for each scrip selected by the investor. The orders are then executed as per the order matching system of the exchange brokers. Investors can choose the frequency of the SIP —daily, weekly, fortnightly or monthly.

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​Keep in mind

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​Keep in mind

  • It is important to check the charges levied by the broker to create stock SIP requests apart from regular charges such as brokerage, and other related charges.
  • The stock SIP instruction can be cancelled or modified at any time by the investor and this takes effect from the next trigger date.

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