Gyaan for the Beginners

So you have finally decided to invest and have opened a DEMAT account. You are now staring down at the figures and have just a rough idea of what you are supposed to do. Well, just going ahead with some ideas in your mind will only just lead you to become another fool. Here’s a list of ‘General information’ for beginners like you. Read it carefully and follow the mantras:

1. Always deal with intermediaries registered with the SEBI/stock exchanges. Do not fall into a trap.

2. Always keep copies of all investment documentation (eg. Application forms, acknowledgement slips, contract notes). You never know when, what will be needed.

3. Send important documents by reliable mode/registered post to ensure deliver.

4. Ensure that you receive contract note at the end of the day/account statements for every transaction.

5. Ensure that you have money before you buy. (Never forget this one!)

6. Always settle the dues through the normal banking channels with the market intermediaries.

7. Ensure that you have holding securities before you sell.

8. Follow up diligently and promptly. Eg: If you do not receive the required documentation within a reasonable time then contact the concerned person immediately, ie; the Trading Member, Company etc.

9. Give clear and unambiguous instructions to your Trading Member/agent/depository participant.

10. Mention clearly whether you want to transact in physical mode or DEMAT.

11. Take an informed investment decision without being influenced by misleading recommendations given in the public media such as newspapers, electronic media, website, etc. Verify all the claims made in such advertisements.

12. Before placing an order with the market intermediaries, always check the credentials of the company, its management, recent announcements made by them and other important factors. The sources of information one can use are websites of Exchanges and companies, databases of data vendors, business magazines, etc.

13. Be cautious about stocks which show a sudden spurt in price or trading activity, especially low price stocks.

14. Always remember: There are no guaranteed returns on investments in the stock markets.

15. Adopt a trading/investment strategy with a risk bearing capacity as all investments carry some amount of risk which depends on what strategy you have adopted. So, always know how much risk you can take.