What is the best way to start investing?


#1

My goal for investing in Stock Market is to make wealth in long term. I lost a considerable amount of money in stock market trading in derivatives. I would like to know how to start investing in stock market afresh.


#2

Learning through books is the best way out there to start learning to invest in stock market. If you have some basic understanding of the working of companies and if you want to improve your own stock picking skills the above method will be very useful.

But if you think that stock market is not your cup of tea and you would not like to pursue stock research then ideally mutual funds and ETF (low-cost index funds) is the best option for you.

The last things you should have ever done is starting to trade in the stock market with derivatives. The derivatives are highly leveraged products. They carry with them high risk and high reward with them. If you are really looking to trading and not investing then you should start with paper trading. Although there are some disadvantages of paper trading but in the long run you are ought to benefit.

Most of the time people are confused with trading and investing. Trading can range from 5min to 1 year. Holding beyond 1 year is investing.

You can start with starting to read the below books.


#3

In a way, @saurabhkhandelwal is right that one should start with Paper Trading but the disadvantages of paper trading can’t be overcome easily. Starting with paper trading is like asking someone to watch and learn from other driving a cycle. Limited to its ability it can be done for a very short period of time.

I am listing down few points which talk about some of the vital points that one should consider going through before starting to invest in the stock market.

1 Understand your comfort zone in taking the risk.
2 Draw a Financial Roadmap with a help of Professional Financial Consultant.
3 It is important to have a Mix of Investments.
4 Don’t start investing without your emergency fund in place.
5 Don’t start investing with pending high-interest rate credit card bills due.
6 Just to gain more money very quickly avoid circumstances that can lead to fraud.
7 Reduce your bad spending habits.
8 Understand your Big Goals in Life before starting off with your investing.
9 It is important to have a bank that is easy to handle online transactions easily with fewer charges.
10 Manage your wants and desire in equilibrium.
11 Your Spouse should be on board with your plans.
12 Good understanding of your investment options before starting off.

Read as many as investment books as possible before starting off in full fledge investing. Habits of reading books on investement should not go easily as it would cost you dear.