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Steps to Buy Stock Without a Broker

12 min read

Investing in stock market is one of most popular form of investments in India as well as across the globe. People are generally interested to invest in a stocks as it has a certain amount of excitement to it. At the same time, they have the fear of losing their invested in money. However, most of them stay away from the market as they lack the knowledge about the same. Beginners have several questions about the basics of investing as it can get a bit overwhelming. Hence, most of the new investors take help of a stock broker who takes care of their equity investments. However, it must be noted that brokers may or may not provide the best service. You need to be extra sure before appointing a broker as you are trusting him with you hard-earned money. Therefore, instead of relying on a broker you can individually venture into the stock market and gradually learn from your own experiences.

Here are some of important steps that you need to take to buy a stock without the help of a stock broker:

  1. Basic Knowledge of the stock market: First and foremost, it is extremely important that you keep yourself informed about at least the basic working of a stock market. Get familiar with frequently used terms such as small, mid, large cap, NIFTY, indices, NSE, BSE, 52-week high etc. You can easily find a number of books on stock markets that have allowed several investors to garner maximum profit in the long run. The Intelligent Investor was written more than 50 years ago and it is still considered to be the Bible of investing. You can also refer to sites like Bankbazaar.com, which give a fundamental analysis of the companies listed on the markets.

Furthermore, you can also take online courses related to finance which will help you get into the basics of the stock market. This will give you the additional help you understand on how to analyse a company’s balance sheet and a profit & loss report. Also, when you are looking to buy a stock in the company, make sure to know everything about the company. You should invest time in doing research about the company’s history, market share, future plans and even check its competition and more. New investors should understand the getting a sizeable income from the stock market is possible only with long-term investment.

  1. Get a PAN Card: Permanent Account Number (PAN) is a unique identification number that is assigned to India. It comprises of 10 characters which are a mix of alphabets and numbers. PAN is mandatory in order to conduct all major financial transactions such as opening a bank account, buying or selling of a property, investing in shares market or mutual funds, among others. You can apply for a PAN card via the NSDL (National Securities Depository Limited) as well as through the UTIITSL (UTI Infrastructure Technology and Services Limited). The application for PAN can be submitted either offline or online.
  1. Open a demat account and trading account: In order to start trading in stock market in India, you need to have a trading account or a demat account.Two depositories in the country, CDSL and NSDL provide demat as well as trading accounts to investors. A demat account holds shares in your name as you cannot physically hold the share of a company. Once you own the share, it will reflect in your investment portfolio. In order to enable seamless fund transfer, the demat account is linked to the your bank savings accounts. Opening a demat account requires documents like PAN card and passport or driving licence for an address proof. You will receive an account number and customer ID, once your application is processed.

You will also need a trading account in order to buy and sell shares in the stock market. Trading account acts as an intermediary which facilitates the buying and selling of the shares. Once you open the account, get to know how it works and become familiar with the basics.

  1. Take advice: There is no harm in taking advice from an expert. You can also consult a financial planner who will give you advice as well as suggestions on how how you should invest depending on your financial situation and the capacity to take a risk. Taking help from a professional will definitely help you have a better understanding of your financial health. Besides experts and financial advisors, you can also talk to your friends and family who have a good experience in investing. At the same time, make sure you gradually build on your knowledge about the stock market and start analysing a shares.
  1. Set a budget: Before foraying into the stock markets, get a clear idea about how much money can you afford to invest at one time. It is important that you understand and evaluate your current financial condition and know your future goals. It is strongly advised that you should use your surplus fund for investing in shares. The stock market is volatile in nature meaning – the rise and fall of the prices are unpredictable. Hence, it is better to invest only the excess funds. Make sure your investments must not negatively impact your other financial priorities and make you feel burdened under commitments.

It must be noted that there are no shortcuts to become successful. In order to gain a decent sum from your stock investments, you have to work hard and take wise decisions. Along with the necessary research and financial help, sometimes you will have to trust your gut feeling while buying or selling a particular stock. Also, always remember that to become a successful investor you have to be patient and let the stock play its own course, as it will give great results in the long run. Finally, be brave enough to take risks it will become difficult to invest in stocks without courage. Al the aforementioned points will help you get started on investing in stocks.

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