Starting To Invest.

How To get started with Investing?

If you cannot explain it simply, you dont understand itbwell enough- Einstein

Nowadays, investing has been made very easy. A hell lot of apps are available which are very safe and easy to use even for people who are just beginning their investment journeys.

Apps like Zerodha, Groww, etc. are commonly used apps that have revolutionized the investment stories of India. Unlike earlier times, when you had to open an account with a broker and had to handle all the paperwork and also had to pay money, these apps hardly need any paperwork, and a very small amount of money as fees is charged which is negligible.

As I use Zerodha for my investments, I will provide a guide for this app. This app is very simple to use and currently has the largest market share of all authorized investment-related apps in India. It is very trustworthy, very easy to use and very cheap.

But before we move towards using the apps, let us understand a few terms:

1. Demat Account: It is the account in which your shares are saved online. Just like you have a bank account, where your money is kept, this Demat account is where your shares, mutual funds, and other investments-related funds are saved. Just like you open your bank account in any bank to keep money and open FD etc., similarly, you open your Demat account in one of these investment platforms to keep your investment-related funds in it. When you go to a bank to keep some money, the first thing that you do is open your account. Similarly, the first thing to do before the investment begins is to open a Demat account in one of these apps. We will understand the process to open a Demat account in Zerodha. It is generally a 16-digit number.
2. Portfolio: Just like you have a bank account balance for money, similarly your investment-related balance or value is called a portfolio. For example, Just like we say we have 1 lakh rs in our bank account, similarly, we say we have 10 stocks in my portfolio. A Portfolio means your total investment-related balance, value, and amount.
3. Watchlists: The list of stocks that you want to keep a look at. It is generally an option in every app and you can add or remove any stock from this list. It is a list of stocks that you keep an eye on.
4. Orders: When you buy or sell any stock, it is shown in orders when the process of selling or buying is going on. It is like your order that is being serviced and processed.
5. Holding: The name and number of stocks that you are currently holding.
6. Long-term and Intraday: Long-term means long-term investing and Intraday means short-term day-to-day trading. We will only choose Long-term, not intraday.
7. Stop-loss, Target, Limit, SL, SL-M: These terms are related to trading and we do not need them.
8. NAV: current price of a mutual fund.
9. AUM: Asset Under Management- The total amount of money being handled by the fund.

These are the main basic terms that we will come across in the app.

Let us now see what thing you need before you start your investment in Zerodha:

You will need:

1. Bank account details with a passbook and a chequebook. Even if you do not have a chequebook, a passbook with all details will be fine. The bank account should be the one that you will use to add money for investing in Zerodha. The bank account details cannot be changed later, so use the bank account which you are sure about.
2. 300 Rs. should be there in the same bank account that is to be paid as 1-time fees
3. PAN card (very easy to get it made online, see youtube videos for guidance)
4. It is good to have a google pay account or any UPI account connected to the same bank account as it will make the process easier.
5. Aadhaar card number that is linked to your mobile number (very easy process if not already linked, see youtube videos).
6. Your signature on white paper.
7. Email id.

Go to play store and download the app called “ZERODHA KITE”. When you download it, it will require you to fill in the details and upload photos of your bank account details, aadhaar, passbook, and canceled cheque with your name(if you do not have a chequebook or your name is not present in the cheque pages, your passbook page with your name and other details will also be fine). It will also charge you one-time fees of 300 rs that you pay while filling in your details. After all, the details are filled in, you will get a large document open and you will have to sign it online. It is also easy, just follow the instructions and it will be done. You can also contact Zerodha helpline if you have any issues.

Once you fill in all these details, it will take 24-48 hours for Zerodha to verify all details and then send you your login credentials (password and pin and login id) to your email id.

Please save these Login details and you can also change the login pin afterward. But keep them noted and saved properly.

Once all these processes are done, you will enter into Zerodha using your id and pin and you will see a page with Watchlists written on top and Orders, Portfolio, Tools, and Your id written at the bottom. This is the first page. You can use the watchlist search box to search for any stock name and its price. When you search for any stock, write its name properly, and then you will see options of NSE and BSE. The price will almost be the same in both. You can buy from anyone you want.

Click on your profile id at the bottom of the first page and then click on funds. This is the first step to adding money to your Zerodha account. Click on add funds, enter the amount and use any UPI or other process to add the amount from the same bank account that you entered while registering with Zerodha. No other bank account can be used other than the one whose details you entered.

After adding money, it will take some time to reflect in the available margin option, just above Add funds option. Once the amount is visible, you can buy stocks up to that amount.

To buy any stock, let us go to the watchlist page and search for any stock. For example, ICICI bank. So when you search for ICICI bank, you will see a page opens which says ICICI bank, NSE/BSE price. (write the full name, like for ICICI bank, do not write just ICICI, Write ICICI bank. If you do not write the full name, some other stock with a similar name will open and you might end up buying other stock. So, if you are not sure about the full name, search online for the name. Generally, the names are the same only, just to be sure, check the name before buying.

After you enter the name and click on NSE, you will see the option of BUY (in blue) and SELL (in red) will come. Its price will also be visible. Click on BUY. A new page will open. You might see a lot of data but these are very easy to understand. Do not get scared. Just the first time, you might get confused, but do not worry. It is very simple and we do not have to focus on all these things. After you click on BUY, on the next page, just edit the number of quantity of stocks you want to buy from this company. Then below, click on Long-term/CNC in the product option, then click on Market in Type option, Variety will be RGLR (Regular), and Validity will be Day. Do not change anything else. Then, Swipe To Buy. If you see terms like intraday or stop-loss, I have already explained their meaning above, they are part of trading and we do not have to think about them.

Once you swipe to buy, your order will be placed and within 2-3 days, it will start showing in your portfolio. Click on Portfolio and it will be visible to you.

Similarly, for mutual funds and Index funds, there is a different app from Zerodha. It is called ZERODHA COIN.

Now, to use Zerodha coin, you first need to have the kite account and all bank details, etc filled. No need to do it again if you already have Zerodha kite process done, as explained earlier. Download Zerodha coin app from play store, enter your Zerodha kite login details and you are ready to start with mutual funds investing. All log-in details of kite and coin are the same. And even if you want to invest only in mutual funds through coin, you need to have kite as you can add money through kite and then use it for coin.

Once you enter coin after entering your login details, click on discover in the below options and you will see options like equity, debt, hybrid, etc. These are the types of mutual funds. Index funds, large-cap, mid-small cap funds, etc are part of equity funds. Debt fund consists of liquid fund, treasury funds, bonds, etc. Click on whichever fund you want to start, as I have already explained the details in another blog article-“Understanding Mutual Funds”. 

Suppose you have to invest in ICICI index fund, search for it and then click on it. You will see 2 options-IDCW Payout and Growth. You have to choose the Growth option fund. For any other mutual fund also, always choose the GROWTH option fund. When you click on the fund, a new page will open saying, the current NAV of the fund.

Below that, you will see CAGR. That shows the % returns that fund has given. The minimum investment is the minimum amount that is required to invest in that fund for the first time. Exit load is the fees that you will pay if you sell the fund before 1 year. The expense ratio is the fees of the fund manager that you will pay for his expertise. AUM is already explained above. You might see the risk involved saying very high even in index funds although index fund is generally considered safe. The risk shown is high as compared to debt funds like liquid funds or government bonds, so do not panic when you see very high risk. You can check the debt fund and you will see it shows moderate or low risk.

Below, it will show sectors and fund holding. It means the sector and companies in which this fund has investments.

Then you will see BUY and SIP options. We will go for SIP. Click on SIP and a new page will open.

The installment amount is the amount that will be deducted every month for that fund. Change Frequency to monthly. Put a date on which you want to deduct money every month. It is good to keep it on the 1st of every month. Automatic step up means your monthly SIP amount will increase 10% every year. So, if you started 100 rs SIP in July 2022, then next year in July, it will increase to 110 rs (an increase of 10%). You can click or unclick on Automatic step up.

Click on create SIP and within 2-3 days, your SIP in that fund will be created.

Similarly, you can open SIP in other funds too. All of your funds and their amount and SIP dates etc will be visible on the investment option below.

Points to remember:

1. This article explains details of how to buy stocks and create mutual funds SIP. Do not sell any purchased stocks or mutual funds without consulting someone. Even if you buy any stock by mistake, consult someone before selling as it will have tax-related issues.
2. This article only tells you an idea about starting to invest and buy. Do the process 2-3 times and you will gradually learn.
3. Multiple youtube videos are available to understand the process. After you read this article, search for videos on youtube to have a better understanding.
4. DO NOT GET SCARED IF, AT ANY POINT, THE PROCESS GETS COMPLICATED OR CONFUSING. YOU ARE DOING IT FOR THE FIRST TIME, SO YOU MAY FIND IT CONFUSING, BUT TRUST ME, IT IS VERY VERY EASY. DO NOT GIVE UP, IT WILL TAKE HARDLY 3-5 DAYS TO START AND UNDERSTAND AND COMPLETE THE PROCESS COMPLETELY. As the investment goes on for many many years, you must give 3-5 days to practice and understand the process.

 

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