Hello, there readers. This is your thamizh again for the blog. Today's blog is going to be the second part of the series "Trip to the stock market". Hope you have read the first part, if not do check out part 1 for a better understanding. So without any further ado let's get started.
As I mentioned in the first part, certain companies have higher return rates while investing in them for long periods. In India, there are two main markets where we can invest in companies that give higher ROI (Return on investment). They are generally termed index funds.
What are index funds???
Index funds are nothing but the ranking of companies that are running in sustained profit in a country's market. Just from the term itself, we can understand this topic. The top companies are ranked in the index based on their financial growth ranking first then, followed by the next profitable company. Index funds are the less risky choice for beginners to invest their money.
Top 10 best index funds of 2023:
- Nippon India Index S&P BSE Sensex
- HDFC Index S&P BSE Sensex Fund
- Bandhan Nifty 50 Index Fund
- Tata S&P BSE Sensex Index Fund
- ICICI Prudential Nifty 50 Index Fund
- Tata Nifty 50 Index Fund
You can see that there is a name called Nifty and Sensex in these funds. They are the markets available for buying/selling a stock. Nifty stands for the National stock exchange and the Sensex is the Bombay stock exchange. These are the index funds where you can find companies to invest in.
what is an IPO?
IPO is called an initial public offer. As I mentioned in the previous part, companies need funds to expand their business so, they go after investors. This is for smaller companies. Well-known companies will provide IPO where their shares will be offered to the public in the market. Anyone can buy/sell that share in the market.
Role of Brokerage and How it Helps in Investing/trading:
You cannot directly buy/sell or invest in stocks of a company. Brokerages are the bridge between the public and the companies to help them buy/sell shares. For their work for you to buy/sell a stock, they charge some % of the money as a commission. In India, many trustable brokerages are available that are approved by the SEBI (Securities and exchange board of India). Some of the brokerages are;
- Zerodha
- Angel one
- Groww
- Upstox
- HDFC securities.
Trading account Vs Demat account:
A trading account is something that is used to buy/sell stocks of a company either in Nifty or Sensex. As I mentioned above you can open your trading account through any of these brokerages that I mentioned up there.
A Demat account is an account where all details of your orders(stocks) are recorded and registered. This process is similar to the process of registration of lands when you buy them. Until and unless you sell the stock or buy the stock using your trading account, the stocks remain unchanged in your demat account forever.
How to open an account for investing???
There would not be a need of creating these two accounts individually. You would be guided to open an account through any of the brokerages and they will be asking for some documents for proof such as whether you are 18 and will ask you to submit your pan card details and Aadhar card number for KYC(know your customer) documentation. After submitting all the required documents, it takes 48 hours for activating your account(In some cases).
Hope you all learned about investments and the stock market today. As teenagers, it is important to develop our skills and be accountable for our actions and decision. Risk management is one of the most important things to develop for a sustainable peaceful life. Take risks in your 20s because if things get wrong you can recover easily from that problem as you are young. Be good Do good. See you all with another interesting content until then, this is your thamizh signing off.
Peace out💸
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