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Want to Invest & Make Money by Your Own - Follow Few Simple Steps

This article is dedicated to retail investor who is willing to learn and earn together. Most of the time we as an investor choose mutual fund and go for SIP investment. The Mutual fund manager invest our money in segment like Growth fund, Balanced Fund, Secured Fund or Bonds. The problem with mutual fund is the growth of your money and the flexibility you should have to enter and exit the investment cycle.

If one want to invest by their own then one can do by yourself. You need to follow the following steps:

Opening of Demat Account:

  • Contact your banker and get an online banking first
  • Ask your relationship manager to open Demat Account
  • Demat account is an account where you get the delivery of your shares in the digital form

Attach your bank account with Demat account so that payment happens seamlessly once you buy share through Trading platform of bank wherein your Demat Account is attached.

Second Step - How to Select Company for Investment

  • You should turn to be ferocious reader.
  •  You must read article around politics, interest rate, inflation, fiscal deficit, current account deficit,
  • You must read which sector is doing good and which sector struggling
  • You should do the above for more than 2 month and post that you will start understanding the micro and macro economy & its impact on the economy

How to Select Right Company for Investment

  • Identify Company or Sector you want to invest
  • Check Company Promoter and share holdings; please note that they should be majority shareholders
  • Check the number of share promoter pledged to borrow money from the market or bank. If the pledged share % is higher should be considered negative
  • Check Company products or services and its adoption in the market place. Please ensure to check the market share of company product. The higher the better
  • Check Company product line up's which will hit the market.
  • Check Company geographical presence. More the better
  • Check Company Competitor and their product or service offering. Please also compare product with competitor product and find out the differentiatio
  • Check the Financial Health
  • Check the Quarterly report and check QoQ and YoY growth.
  •  Check the EBITA margin of the company and its growth
  • Check the capex and opex of the company
  • Check EBIT of the company and its growth or de-growth
  • Check net cash generated by the company. More positive cash flow indicate growth
  • Check total debt on the company
  • Check Net Debt of the company, Net Debt = Total Debt - Total Cash; if it is positive then company has net debt else net cash positive. One should look for net cash
  • Check Earning per Share ( EPS); if it is higher means good
  •   Check Price/Earnings and it should be lower.

When to Buy It

  • Once you identify the Company then start tracking the share price for a week
  • Check the trend and don't miss to read the industry reports or analyst reports or press release of the company
  • Start buying the share in small quantity during market selloff
  • Never play around in Future and Option whereas always take the delivery of share in your Demat
  • If share price goes down then dont get panic as you will be confident about the company future.
  • Keep buying small quantity and reduce the average buying price
  •  Minimum keep the share for 12 months to bypass Short term gain

By adopting the above simple process, being an investor you will learn and earn together. At the same time, you will never be dependent on anyone else.
Please consult your financial advisor before investing.

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About Devendra Prasad

20 years plus industry veteran of domestic and international ICT domain with the expertise in Business, Technology, Strategy and Analysis. Specializes in forecasting impact analysis, trends and recommendations for Investments, Technology and Regulations.
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  1. Excellent post for novice traders, keep it up :)

  2. It would help a lot to start the savings on a right path.