How to invest in Share Market

how to invest in share market

How to invest in Share Market ?  this is a big question for a new investor, in this article will will discuss on it in details, and we will tell you different ways of investing  and then we will cover step by step process to invest in Share Market. But before moving further we need to answer to another question which is why to invest in Share Market ?

Why to Invest in Share Market ?

To invest in Share Market for beginners  is very difficult , where they should invest their money, because in many cases, they don’t have the basic knowledge of how to start investing. And lots of people keep giving them different suggestions. Like, we have been listening from our parents since childhood that FD is best to invest. Some one of your friend suggest you to invest in real estate, some will will suggest you to invest in gold similarly like mutual funds, LIC or NPS etc. But the question is how will you decide ?


You can invest in FD, PF, stock market, gold, or real estate. So how to determine where your money should be invested. The first thing is, it is very important to compare all of them. Let’s see a chart for that.

how to invest in share market

 So, as you can see in this chart, we have analyzed different asset classes for the period of last  20 years and have seen how they have performed, and how they have generated wealth or money for the investors. From this, you can clearly establish that if you are investing for long-term, like, 10 or 20 years, then stock market or equities, outperformed all the other asset classes. So,  this is the answer of why to invest in Share Market.

Time duration for your Investment

After deciding to invest in Share Market the big question is how to invest in Share Market. Here, it is very important to understand that before starting the investing journey, the first and most important thing is to determine when you will be needing the money back ?

 You may need the money back in 6 months or 1 year. And this need can be for anything. You may want to buy a car after 1 year, or go on a holiday after 6 months, or buy a house after 5 years, or plan for retirement after 15 years. So your goal for the end of the time period can be anything.

 But it is very important to determine the duration of your investment. If you want the money back in 6 months or a year, it is always safest to deposit it in FD in a bank because it carries zero risk to your money. You always get the money back with a fixed return on your investment.

But if you have a long-term horizon where you are investing for 5 years, or 10 years, or more, then you should always invest in equities or the stock market because, as you saw in the chart, you can earn good returns in that period compared to other asset classes.

Some Common problems faced by new Investors

let’s look at the problems that you face if you are a first-time investor.

  • The most common problem is that you don’t understand the lots of difficult financial terms. Like, some will come and talk to you about CAGR, some will advise you to invest in arbitrage schemes, some will ask about returns or risk-reward ratio. Understanding all this becomes a very difficult thing for first-time investors. So this is a very common problem which we have always observed in the case of first-time investors.
  • The second problem is that, generally, first-time investors give too much importance to returns, although you can always see a regulator or disclaimer in a document that past returns never guarantee future returns. It means that if anything has performed well before, there is no guarantee that it will perform well in the future too. If there is such a disclaimer, is it right to give too much importance to the past returns or not? Because if anyone is trying to sell any investment product to you, they will always talk about past returns first of all.
  • The third important thing to understand is that how much risk is involved in the investment. And if you want to avoid that risk, protect yourself from it, what is diversification. Why do people say that instead of a single stock, you should invest in a portfolio of stocks. Right?
  • And the fourth thing, which is very important, but most people avoid it, is how much fees is involved in a product. Because you may think that the fees is just 1% or 0.5%, but whenever you invest, compounding is always at work. You think it is 1%,but if it is 1% for 10 years it won’t total to 10%.It compounds to a much higher percent. It can total to 15% or 20% or even higher because compounding is always at work. So these are the four general problems for first-time investors who have decided to invest into the stock market.

How to Invest in Share Market ?

Now, there are different methods to invest in those stocks or ETFs.

Invest via Mutual Fund:

You can invest through mutual funds. When you invest in mutual funds, you actually give your money to a mutual fund company, there actually a group of professionals and fund manager present who invest these collected funds in equity and debt,  it’s totally  fund manager decision where he would  invest those money. These are different types of mutual fund schemes available, you can check them. To read different types of mutual funds you can check our other articles about mutual fund here.

Actually mutual fund is the way to invest in stock market for those people who either don’t have the knowledge to research and analysis  or don’t have time. Therefore they choose this way and on behalf of them  some experts and professionals do their work and manage their fund. In favour of it they charge some fees like 1-3% which is called operating expenses.  To invest via mutual fund you can directly go to Asset management company (AMC) or you can invest , like HDFC Mutual funds, SBI Mutual Funds, Kotak mutual funds etc. There is a long list of these AMC where you can directly choose their different schemes.  

You can also invest in mutual fund via a broker account, today almost all the top brokers provide the facility to invest in mutual fund via their platform like Zerodha, Motilas Oswal, Angel broker, Sharekhan etc.

Invest via Broker:

A second way is to invest directly through a broker. Through a stock market broker like,HDFC Securities, or Axis Direct, or Zerodha, you can directly buy the stocks. You can buy stocks of any company through these brokers, like, HDFC, Reliance, Kotak Mahindra Bank, or any company. But here the criteria is you have the ability to do your research and analysis by your self, so that you find some good companies where you can invest.

To directly invest in a company first you need to open a demat and trading account to a broker first. If you want to open a demat account then you can follow the link here.  Its a 5-10 mins process  to open an account online. To read more about demat account and trading account read the article Difference between Demat account and Trading account. When you have your demat account and trading account then you can directly place an order for a share where you would like to invest your money.


A third way to invest in stocks is smallcases. Let’s undestand what smallcases are. Smallcases are actually a group of stocks, or you can say it’s a basket of stocks which are related to each other through a theme or an idea.  

Like Rising rural demand – companies that stand to benefit from increasing rural consumption.

Electric mobility – Companies expected to benefit from growth in the electric vehicles ecosystem,

Specialty Chemicals – Speciality chemical manufacturers that benefit from demand from end-user industries and government initiatives  etc, these are some themes based on different segments.

Currently smallcase is providing their service with 9 top brokers, you can login to smallcase via their platform like zerodha, AxisDirect, HDFC Securities etc.  

That’s the end of this article How to invest in Share Market, here  we have tried to find out all the possible way to invest your money at some good places. Now it own you take your wise decision and choose the way by which you want to invest your money in share market. If you find this article helpful then don’t forget to share it with your friends and on social media platforms.

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