Source : Rediff & BSE-India
Know Below Procedures Before Investing in Stocks:
- Get yourself a PAN (Permanent Account No.), if you don’t have one. PAN no is mandatory for any financial/investment transaction in India, including Mutual Fund investments. Usually one receives the PAN card within 15-21 days of application.
- Open a trading account with ICICIDirect or an Investment account with Citibank. If you already have a bank account with either bank, opening the investment or trading account is fairly simple. You will need to fill up some additional forms, and you can be ready to roll withing 7-10 days
- Invest in the best mutual funds with as little as Rs. 500 per month. A mutual fund is managed by a professional fund manager, who is deeply involved in the stock market, has years of experience, has a team of analysts to help him strategise and buy/sell. He is much better equipped to handle your money and buy/sell stocks on your behalf -money pooled form all subscribers to the mutual fund. Most well performing mutual funds return atleast about 15-20% per annum.
- Next you need to do some research, about the best funds to invest in. Its generally not advisable to start SIPs in funds that have performed best in the last 1 yr. Make sure to check what their record is over the last 3 yrs, 5yrs and since inception. Its generally not advisable to invest in too many funds. You may end up in funds with similar styles and your returns will end up fragmented. Pick 4-5 funds at most and split your money equally to start with. If you have Rs. 2000 to put in SIPs every month, go for 2 funds that you like. If there is Rs. 5000 sparable, go for 4-5 funds. More than that, again split equally among the 4-5 funds
- Once funds are identified, you then need to use the SIP purchase option in ICICIDirect or RIS (Regular Investment Scheme) in Citibank. Choose the Fund Company, select the appropriate fund and click on SIP/RIS, enter monthly amount, and you are done!
- Make sure to monitor your investments every 3 months or so. Check what returns the fund has given you.
Important Points – BSEIndia Courtesy:
- Always deal with the market intermediaries registered with SEBI / stock exchanges.
- Collect photocopies of all documents executed for registration as a client, immediately on its execution. Ensure that the documents or forms for registration as Client, are fully filled in.
- Give clear and unambiguous instructions to your broker / agent / depository participant.
- Always insist on contract notes from your broker. In case of doubt in respect of the transactions, verify the genuineness of the same on the BSE website.
- Always settle the dues through the normal banking channels with the market intermediaries.
- Before placing an order with the market intermediaries, please check about the credentials of the companies, its management, fundamentals and recent announcements made by them and various other disclosures made under various regulations. The sources of information are the websites of Exchanges and companies, databases of data vendor, business magazines etc.
- Adopt trading / investment strategies commensurate with your risk-bearing capacity as all investments carry some risk, the degree of which varies according to the investment strategy adopted.
- Carry out due diligence before registering as client with any intermediary. Carefully read and understand the contents stated in the Risk Disclosure Document, which forms part of the investor registration requirement for dealing through brokers.
- Be cautious about stocks which show a sudden spurt in price or trading activity, especially low price stocks.
- There are no guaranteed returns on investment in the stock market .
- Always keep copies of all investment documentation (e.g. application forms, acknowledgements slips, contract notes).
- Always keep copies of documents you are sending to companies, Trading Member, Registrar and Transfer Agent, etc.
- Send important documents by a reliable mode (preferably through registered post) to ensure delivery.
- Ensure that you have money before you buy.
- Ensure that you are holding securities before you sell.
- Follow up diligently and promptly e.g. If you do not receive the required documentation within a reasonable time, contact the concerned person; i.e. the Trading Member, company etc., immediately.
- Mention clearly whether you want to transact in physical mode or in demat mode.
- Lodge your Arbitration Application against the Trading Member, at the concerned Regional Investor Service Centre, by confirming geographical jurisdiction. Please use for the purpose, your address as intimated to your Trading Member by following due process of law. The details of geographical jurisdiction of each Regional Investor Service Centre are also available on the Contract Note. The period consumed in redressal of complaint thru IGRC services will not be considered while measuring period of ‘limitation’ in filing arbitration application provided the complaint and / or arbitration application is / are filed at the concerned Regional Investor Service Centre.
- Lodge your complaint against a company listed on BSE, at the concerned Regional Investor Service Centre, by confirming geographical jurisdiction. Please use your address for deciding the geographical jurisdiction. This will enable to process the complaint expeditiously.
- Don’t deal with unregistered brokers / sub – brokers, or other unregistered intermediaries.
- Don’t execute any documents with any intermediary without fully understanding its terms and conditions.
- Don’t file your arbitration application against trading member, in the Regional Investor Service Centre having no geographical jurisdiction.over the matter. Please use for the purpose, your address as intimated to your Trading Member by following due process of law
The Exchange redresses investors’ complaints thru arbitration and IGRC mechanism, which are quasi-judicial in nature. The period consumed in redressal of complaint thru IGRC will not be considered while measuring period of ‘limitation’ in filing arbitration application provided the complaint is filed at the concerned Regional Investor Service Centre.
- Don’t file your grievance /s against companies listed on BSE, in the Regional Investor Service Centre having no geographical jurisdiction over the matter, for its expeditious redressal.Please use your address for deciding the geographical jurisdiction.
- Don’t deal based on rumours or ‘tips’.
- Don’t fall prey to promises of guaranteed returns.
- Don’t get misled by companies showing approvals / registrations from Government agencies as the approvals could be for certain other purposes and not for the securities you are buying.
- Don’t leave the custody of your Demat Transaction slip book in the hands of any intermediary.
- Don’t get carried away with advertisements about the financial performance of companies in print and electronic media.
- Don’t blindly follow media reports on corporate developments, as some of these could be misleading.
- Don’t blindly imitate investment decisions of others who may have profited from their investment decisions.
- Don’t forgo obtaining all documents of transactions, in good faith even from people whom you know.
- Don’t forget to take note of the risks involved in an investment.
- Don’t get misled by guarantees of repayment of your investments through post-dated cheques.
- Don’t hesitate to approach concerned persons and then the appropriate authorities.
- Don’t get swayed by promises of high returns.