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How to invest directly in stock market?

I need to invest for the long term. That is the only way I can convert my debts into savings. But keeping my money in any bank or in fixed deposits is not going to give me a better return than what my loans are charging me. For example, if I invest directly in the stock market I get an average interest of 12%. But my loans are charged at an interest rate of 10%. So instead of paying up my loans if I put that money in investments, I will get a return of 2%. To put that in numbers say I have a loan of 5Lac. With interest, I am paying 7Lac to the bank. But if I invest 5Lac in equity or stock market shares then I will earn an average return of 8Lac. That’s 1Lac profit.

Averaging the earning.
I am averaging the earning to 8Lac because the market might fall.

Now you know the answer and math behind why I want to invest rather than pay off my debt first. You may ask why invest directly in the stock market? We have mutual funds and other different types of funds too? I’ll explain what other types of funds are but investing in equity is my preferred choice. I like to take a little bit of risk. Every day I use so many products. From the coffee, I drink to the food I eat and dress I wear. And some of them are my favourites too from my childhood. Like Britannia, Bata, Exide Batteries, Parachute Hair Oil, Airtel, Hammam Soap, IRCTC, SunTV, and PVR Cinemas. Back then I never knew they were listed in the market. If these companies existed for the past 30yrs then I am sure they will be for the next 20yrs. I am ready to take that risk.

There is only one way to invest in stock markets. That is through a Demat Account first. Please read here to understand what a Demat Account is. To put in simple words it like a bank account but here instead of money you store the shares that you buy. There are three many categories of provides with whom you can open your Demat Account. These providers are called as Depository Participant or DP in short. These three categories are banks, full-fledged brokers and discount or modern brokers.

I chose my DP based on the brokerage they charge and the services they provide. Almost all the DPs provide the same services that is letting me buy stocks. But some also give reports and suggestion about the day’s market before it starts. But mainly I would rate the brokers with their charges. The Bank DPs are the costliest. Almost all major banks can provide you with a Demat account. But lookout for the charges and decide. The next comes the traditional full-service retail brokers. Some of them have existed for more than two decades. They charge a nominal brokerage fee and in turn provide:

  1. Reports and suggestion every day regarding the market.
  2. Give you pointers on when to invest and when to exit.
  3. Leverage your investments so that you can invest more.
  4. Provide loans based on the stocks you hold.
  5. Give you a personal account manager to whom you can call and trade your stocks.
  6. Give you support over the phone if you have issues with the account.

One such traditional broker is Angel Broking. They established their business in 1987. Yup! they are that old and one of the best. I am speaking the following from my personal experience. It was during COVID-19 lockdown in 2020 when I wanted to open an account. SEBI which overlooks all the securities market had put tough guidelines to open a Demat account. But I was able to open one with Angel Broking very easily just through my phone app. I was able to scan all the required documents and even digitally sign them. I found this extremely useful and totally surprised to be done by such an old company. Here is a link if you need to open an account with them.

Then comes the modern brokers. They are also called as discount brokers because of their ultimate cheap brokerage rates. The two best ones I know are Upstox and Zerodha. After comparing much I chose Zerodha. I chose Zerodha because of the following.

  1. They are super cheap.
  2. They have the largest number of customers as of 2018 rated by National Stock Exchange.
  3. Their software Kite is one of the best. It’s developed totally using HTML5 and its very light and easy to navigate.
  4. They have good integration with payment services.
  5. Their on-boarding process was a breeze and all documentations were done online.
  6. They have so many other services in the form of apps that you can add to your account. For eg: you can buy Digital Gold coins, Mutual Funds, take part in IPO and much more.

With so many good points it would be hard to believe that there are no bad points. But there are. Zerodha does not provide phone support. They reply only through emails. Also, their software is sometimes glitchy. When more people tend to suddenly login I along with many have experienced the issue. And that is exactly why I have accounts with best of them both. So whenever it’s crucial I can access either. But all in all, I trade most with Zerodha because of their platform/software and brokerage cost. If you are interested in opening an account with Zerodha here is the link.

I would like to also mention that Zerodha also has access to ‘smallcases’. I love these services which I can access through Zerodha. Smallcases are like mutual funds. But instead of buying points of a stock, you actually buy the stock. Meaning – you can actually get to own the stocks in your Demat account. We will talk about smallcases in detail later.

But for now, I guess I have shared on how to invest directly in the stock market. We will talk about the process of buying stocks very soon. Here I will clear the doubts of what is stocks and from where it is bought and so on.

Disclaimer: The links to the stockbrokers I shared have my referral link. Click on them will give me a commission. But nevertheless, they are the best out there and I wanted to write this article to introduce them to you. Also, I may have a position in the stocks that I have listed here. I never recommend or suggest buying any shares written here. It’s only for example and educational purpose.

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