Share market investment or stock market investment is not sought after by the middle class and lower middle class due to the complex process involved in buying and selling shares, also it carries the risk of high volatility, but the biggest question is, why people, especially big corporates and high net worth individuals invest in share market? This question is too technical to answer and the truth is, the share market is open to everyone and the potential is very high.
Due to popular demand and continues requests, this simple short read is presented, which is constructed by our guest writer, who is wealth manager and stockbroker by profession, rest is of this article is golden information to beginners.
Thanks to the Colombo stock exchange, investing in all major players in the country is possible and investing in share market literally makes you one of the owners of the company you invest in. let’s look at How to invest in share market
Colombo Stock exchange Website, Home Page (Screen Shot on 15/02/19)
The Stock market is an ocean and it’s not possible to learn every aspect of its components and how it is operating, however, you can master the art of investing by starting with a small amount, watch the market stats daily and understand the factors affecting the price of shares, later your understanding and experience will make you a veteran investor.
Find a Stockbroker of your preference
You should have a stockbroker to buy and sell shares in the Colombo stock exchange, find a stockbroker who will provide you valuable insights about the share market movement. A stockbroker will play the intermediary role between you and the stock exchange. A stockbroker with an online trading facility, daily, weekly research insights are much required to start as a new bee.
To find information about stockbrokers: http://www.cse.lk/home/tradingMembers
Open your Trading account and CDS Account
This step will be looked after by your stockbroker, you just need to fill the forms and hand it over to your stock brokering firm and they will do the needful and provide you with the account details.
Start investing with a small amount
You are all set to start buying and selling shares Once your accounts are active, don’t be in a hurry to buy and sell shares, select few companies and invest a small amount and observe, most of the stockbrokers will advise you to use the online trading, or you can call your stock broker and ask them to buy or sell your preferred share. Each trade you make is subject to broker fee and
Visit: www.cse.lk for more information and resources.
Learn the basics while you invest
Don’t be greedy to get immediate returns from your share investments, there are day traders and there are investors, day traders used to buy and sell within a short period as the prices fluctuate and investors will observe the condition and the potential of the stocks. Day trading is riskier and investing is ideal for the current context. Spend your time in studying the patterns of the stocks and understand the market risk. Remember, don’t burn your finger by investing all your savings in the stock market. Patients will bring you rewards, start increasing your investment in strong companies when you think you have acquired sufficient knowledge.
What are the alternatives you have?
if you are afraid to start investing on your own, you can go with a unit-trust company or a fund management company to manage your investments. Unit trust companies are professional fund management companies, they will pool your funds with other investors fund and invest in various stocks as a portfolio investment. The advantage of a unit trust is they are professionals and they know all the market techniques to minimize your risk, but you will not have any control over your investment.
I must quickly remind you that this is a simple guide to start investing in the share market and you have to learn a lot to master the art of investing in stocks. You have to learn about different type of boards, different types of indices and different types of stocks. But, starting is important and the little information we provided above is sufficient enough to start and roll.
Disclaimer: The information contained in this article is for informational purposes only, should not be considered as investment advice. Always make sure to do your own research, talk to your financial advisor and/or seek independent advice where appropriate & necessary.