Having the right guidance when it comes to investing in stocks is the key to a possibility of getting good returns on your investments. The right know-how of which are the top stocks for beginners and the best stock to buy for beginners make the difference.
Shares, interest, brokers, Nifty, Sensex, etc., these are terms that you get to hear or read every day if you are looking at any investment or business-related information. But do you know what these terms mean? If you are someone who is inquisitive to learn about stock markets, wants to try their hand at investing and is in search of good stocks to buy for beginners, this is a one-stop guide for beginners.
What is a stock market?
In layman terms, a stock market is a global network of exchanges where large sums of money move daily. It does not trade in goods or services, but it trades in securities. Securities are rights to financial assets like a business share. A share is a portion of ownership in a company.
When a person buys a share from a company, they buy a small ownership in that company. Shares are initially traded by the founders of the company to raise capital for their business. Subsequently, other shareholders start trading these shares with each other. So, to facilitate the trade of these securities, a marketplace to perform these transactions is needed. Typically, these marketplaces are known as stock exchanges.
There are mainly two types of stocks or shares:
- Common Shares: Most stocks that are publicly traded are issued in this form. A common stock gives you the right to vote at the shareholders’ meetings and receive dividends.
- Preferred Shares: A preferred share comes with an advantage and a disadvantage. Although you will have more claim on the assets and earnings of the company, you might not have the right to vote in the shareholders’ meetings.
How to invest in the best stocks for beginners?
Here are a few simple steps to begin your investment journey:
Step 1: Identify a good broker
Step 2: Create a DEMAT and trading account
Step 3: Start trading
The next question that you should ask yourself is, which are the stocks to invest in for beginners and which are good starter stocks? Ideally, to choose a stock, you need to look at a company’s growth as well as its risk governance history over a period of time, compare the company’s and its peers’ performance, the company’s debt, among various other parameters, to determine the best stocks to invest in.
However, as a beginner, you can also start with trusting the collective faith of the larger market that determines which companies make it to the benchmark indices like BSE Sensex or NSE Nifty-50. Accordingly, you can easily identify some of the best stocks to invest in for beginners.