6 Precautions To Take When Investing In The Stock Market

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Making money from the stock market is not an easy task. It requires patience, discipline, research and understanding of the market. Every equity investor would have asked many questions himself sometimes while dealing with stock market trading. When the stock market is moving to heights or crashes, it's easy to get nervous or over-excited.

Given below are some general do's in the stock market.

1. Documents

Collect photocopies of all documents used for registration as a client. Ensure that the documents or forms for registration as Client, are filled in. You need to deal with many documents for trading in stock market such as application forms, acknowledgments slips, contract notes, etc. Always keep copies of all investment documentation. Remember to keep copies of documents you are sending to companies, Trading Member, Registrar and Transfer Agent, etc. If you are sending documents, choose the registered post method to ensure delivery.

2. Complaints

It is common to have complaints and disputes while dealing with stock trading. When a complaint arises, lodge your complaint against a company listed on BSE, at the concerned Regional Investor Service Centre, by confirming geographical jurisdiction. You should use your address for deciding the geographical jurisdiction. This will help to process the complaint expeditiously.

3. Broker

Always deal with the market intermediaries registered with SEBI or stock exchanges. When you start investing in the stock market, the broker and brokerage firm are the basic relationships that you have. It is important to give correct and definite instructions to your broker or agent or the depository participant. Always insist on contract notes from your broker. If there are any doubts regarding transactions, make sure to explain it.

4. Settlement of dues

Always settle the dues through the normal banking channels with the market intermediaries. Before placing an order with the market intermediaries, please check about the credentials of the companies, its management, fundamentals and recent announcements made by them and various other disclosures made under various regulations. The sources of information are the websites of Exchanges and companies, databases of data vendor, business magazines etc.

5. Risk and return

Risk and return are related in the stock market. All stock market investments carry some risk. When you are taking a decision, make sure to carefully read and understand the contents stated in the Risk Disclosure Document. The return on stock market investments is not guaranteed, be cautious about stocks with the high price and high risk.

6. Don't ignore expenses

Ensure that you have money before you buy stocks in share market. While buying and selling shares, you will have to pay a brokerage fee and a Securities Transaction Tax in stock markets. This may affect your profits, if you are selling for small gains, like when the price of the stock has raised only in few rupees. Entry loads and exit loads levied in the stock market. Entry load is levied when you buy units and an exit load when you sell them. 6 Biggest Mistakes Stock Market Investors Makes

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