Thursday, 17 September 2020

Investment in Share Market for Beginners | Learn Basic of Investment

Investment in Share Market for Beginners: In this article, we are going to cover the basics of share market/ stock market investment thought analysis, also we will cover multiple points and terms which is very much helpful once you start playing and enjoying in the stock market and when you gonna buy or sell your first stock.

investment-in-share-market-for-beginners-in-india

Beginners investing in stocks here the first thing that comes to mind is this complicated world of the stock market. With so many charts and numbers, it’s easy to get confused, so let’s break it down and try to make sense of it. 

Let’s say you’ve built a business, but now you need some more money to expand, or maybe you just want a private jet. Where do you get the money from? Here’s an idea for you, why not break down your business and sell some of it while keeping the majority to stay in charge? That’s what the stock market is for and this process is known as the Initial Public Offering (IPO). But how much money can you earn? 


How Share Market Works-Beginners Investing In Stocks

Beginners investing in stocks, Let’s take an example of Mark Zuckerberg’s little toy: Facebook. It went public in 2012 with 337 million shares at a price of $ 38 a share. Not bad, right? But, when he realized that there were many more people who wanted a piece of his cake, he added another 84 million shares (421 million). And guess what? He sold each and every one of them. And it raised $ 16 billion. 


Also Read 5 Parameters you Should Know Before you can Buy or Sell Shares


He literally became a billionaire in a few hours. In fact, the stock price rose to $ 45 within the first trading day. It seems like Facebook was doing really well, but it was too early to celebrate because at the end of the day it looked like I was 38 years old, and that was just the beginning. The bad news was just beginning. In the next few weeks, the shares tumbled to $ 20.


What is Dividend

Twice less than the original price Now, to understand what’s going on here, we need to get to the root of the stock market. In the past, shares were mainly bought for dividends. Theoretically, when you buy a stock, you become the owner of that company. 

Which means you like any other owner is entitled to the company’s profit. Congratulations, you bought 10 Facebook shares in January 2020 and now you own Facebook just like Mark, and I’m not kidding. So, your company (Facebook) earns $ 15.934 billion, how much does it belong to you ?! At the end of the day, you spent $ 1300 to buy your 10 shares. (Facebook stock price as of January 2020) But first let’s take a look at how many stocks there are in total. It turns out that there are nearly 3 billion (2.956 billion). I doubt your 10 actions matter now. 

we are optimistic Because, if we divide the net income by the number of shares, each share should earn just over $ 5 (5.39 = 15.934 billion / 2.956 billion), by the way, this is known as EPS (earnings per share). In other words, your stock 10 is supposed to make you nearly $ 54 (53.9). Not bad, right? But it’s just hypothetically, in practice, you get absolutely nothing!

The board of directors is the one who will decide what to do with this money. And your first priority is to line your pockets and expand the company, so no one really cares about your 10 stocks. But don’t worry, not everyone is a scammer like Mark Zuckerberg. For example, last year Apple paid out $ 13 billion in dividends (12,769 B) or $ 2.5 for each share (2.46). Of course, it is not much for a stock that costs $ 170, but something is always better than nothing. However, today, it does not matter how much the company pays as much as the share price.

 Apple shareholders saw a 33% profit in a single year! That is much better than the market average. ($ 120 to $ 160) You’ve probably heard by now that Apple is the first company to cross a trillion-dollar valuation because its stock price crossed $ 200. But what if I told you that as of June 2014, Apple’s stock price was $ 645. Does that mean the company was already valued at more than $ 3 trillion? Oh my, this stock market is so fucking complicated. Let me explain. There’s something called a stock split

Each stock was divided into 7 pieces, and prices were reduced proportionally ($ 92.7). Technically, nothing really changed, but now more people can pay for the stock and join the Apple investor community. Since the stock now costs $ 92. But not all companies do that, some prefer to work only with serious people like Warren Buffett. His Berkshire Hathaway company has never divided its shares. that’s why it only has 1.68 million shares, compared to Apple’s 5 billion (4.91 billion). 

That’s why the shares of a single buffet (Berkshire Hathaway) cost more than $ 300,000. I guess most of us will never join the secret investor society buffets. But don’t worry, Buffett wouldn’t mind taking your money either. That is why he created class B shares that are more affordable (200usd).


Let's see 3 important points to remember while investing money in the stock market as follow:


1. Decide how you want to invest in stocks


There are several ways to approach stock investing. Choose the option below that best represents how you want to invest, and how hands-on you'd like to be in picking and choosing the stocks you invest in.

"I'm the DIY type and am interested in choosing stocks and stock funds for myself." Keep reading; this article breaks down things hands-on investors need to know. Or, if you already know the stock-buying game and just need a brokerage, see our roundup of the best online brokers.

"I know stocks can be a great investment, but I'd like someone to manage the process for me." You may be a good candidate for a robo-advisor, a service that offers low-cost investment management. Virtually all of the major brokerage firms offer these services, which invest your money for you based on your specific goals. See our top picks for robo-advisors.

Once you have a preference in mind, you're ready to shop for an account.


2. Set a budget for your stock investment


New investors often have two questions in this step of the process:

How much money do I need to start investing in stocks? The amount of money you need to buy an individual stock depends on how expensive the shares are. (Share prices can range from just a few dollars to a few thousand dollars.) If you want mutual funds and have a small budget, an exchange-traded fund (ETF) may be your best bet. Mutual funds often have minimums of $1,000 or more, but ETFs trade like a stock, which means you purchase them for a share price — in some cases, less than $100).

How much money should I invest in stocks? If you’re investing through funds — have we mentioned this is our preference? — you can allocate a fairly large portion of your portfolio toward stock funds, especially if you have a long time horizon. A 30-year-old investing for retirement might have 80% of his or her portfolio in stock funds; the rest would be in bond funds. Individual stocks are another story. We’d recommend keeping these to 10% or less of your investment portfolio.


3. Focus on the long-term


Stock investing is filled with intricate strategies and approaches, yet some of the most successful investors have done little more than stick with the basics. That generally means using funds for the bulk of your portfolio — Warren Buffett has famously said a low-cost S&P 500 index fund is the best investment most Americans can make — and choosing individual stocks only if you believe in the company’s potential for long-term growth.

The best thing to do after you start investing in stocks or mutual funds may be the hardest: Don’t look at them. Unless you’re trying to beat the odds and succeed at day trading, it’s good to avoid the habit of compulsively checking how your stocks are doing several times a day, every day.


Conclusion:


Share market topic is never going be end there are n numbers of topics and discussion and opinion. But today we have share the basics of investment and share market investment guides. I hope you have some basic idea about this now. If you find this useful kindly share on Facebook and Twitter. Thanks for reading.

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