How To Purchase Shares in 2025 – A Complete Beginner’s Guide

Let’s say 26-year-old Meera from Pune wanted to grow her savings of ₹1,00,000. She wasn’t sure where to begin, but after reading expert advice, she split her money smartly:

• ₹40,000 in Consumer Durables (CAGR: 22.97%)
• ₹30,000 in Capital Goods (CAGR: 17.67%)
• ₹30,000 in IT (CAGR: 14.84%)

After a year, her investment grew to ₹48,988 in Consumer Durables, ₹35,301 in Capital Goods, and ₹34,452 in IT — a total of ₹1,18,741, a gain of ₹18,741!

Isn’t that exciting for a first-time investor?

Key Pointers:

• Pick sectors with steady growth.
• Spread your money across 2–3 industries.
• Don’t rush—do your homework!
• And hey, even small smart steps can grow big, isn’t it?

What Are Shares and How Do They Work?

The information below is taken from an Economic Times article.

Let’s say Priya wanted to save and grow her money. She decided to invest in a company called TechCo. She bought 100 shares at ₹50 each, spending ₹5,000. This made her a shareholder, which means she now owns a small part of TechCo. 

After one year, the company did well and gave ₹2 as a reward (called a dividend) for each share. So Priya got ₹200. The price of each share also went up to ₹70. She sold all her shares for ₹7,000 and made a total profit of ₹2,200.

What are Shares?
 

Shares are small parts of a company. When you buy them, you own a piece of the company and can earn money if it does well.

Key Points (Explained Through Priya’s Example):

• Ownership: 100 shares gave Priya part-ownership in TechCo.
• Dividend income: She earned ₹200 from the company’s profits.
• Capital growth: Her shares increased in value by ₹20 each.
• Market risk: The value could have dropped, too; investing always carries risk.
• Voting rights: As a shareholder, Priya could vote on important company matters.
  
  

Why Should You Invest in Shares?

Let’s say Ravi had ₹50,000 in savings and wanted to grow it. He invested ₹30,000 in ABC Company shares at ₹150 each, buying 200 shares. Over two years, the share price rose to ₹220. He sold them for ₹44,000 and earned ₹2,000 in dividends during that time. 

Ravi’s total return was ₹16,000, proving how stock investing can build wealth—but only if risks are managed.

Why invest in shares?

• Capital growth: Share prices can rise over time.
• Dividend income: Regular payouts add value.
• Liquidity: Easy to buy/sell shares.
• Diversification: Spread risk through sectors or ETFs.
• Risk factor: Prices can fall due to market or company issues.
  
  

What Do You Need Before Buying Shares?

Let’s say Aarav wanted to invest ₹25,000 in the stock market. First, he got his PAN card, linked his bank account, and opened a Demat and trading account through a stockbroker. Then he researched XYZ Ltd, a renewable energy firm. 

He studied its business model, annual report, and key ratios—its P/E ratio was 15 and dividend yield 3%. Confident in its growth, he bought 100 shares at ₹250 each. Over 6 months, the price rose to ₹310, giving him a profit of ₹6,000.

Steps Before Investing:

• Open PAN, bank, Demat, and trading accounts
• Register with a broker
• Research the company
• Check financials and ratios
• Set goals and assess risk
  
  

How to Choose a Stockbroker?

Let’s say Riya had ₹50,000 to invest. She looked at two brokers. Broker A charged ₹20 per trade and had good tools and support. Broker B charged ₹10 but had bad reviews and fewer features. Riya planned 10 trades a month. Though Broker A cost ₹100 more, it was safer and better. So, Riya picked Broker A for peace of mind.

How to Choose a Broker:

• Define your trading frequency and goals
• Compare fees, tools, and support
• Check SEBI registration and platform quality
  
  

How To Buy Shares Online?

1. Get a PAN Card
   A PAN (Permanent Account Number) is required for all stock market investments in India.
   
   
2. Choose a Stockbroker
   Pick a SEBI-registered broker with a reliable platform for online trading and Demat services.
   
   
3. Open Demat and Trading Accounts

Demat Account: Stores your shares digitally.

Trading Account: Let's you buy and sell shares.

4.   Link Your Bank Account
Connect your bank account to your trading account for easy fund transfers.

5.   Add Money to Trading Account
Deposit funds into your trading account to purchase shares.

6.  Research and Pick Stocks
Study company performance, news, and financial data to select the right shares.

7.   Place a Buy Order
Log in to your trading platform, choose the stock, enter the quantity, and place your buy order.

8.  Order Execution
Your order is sent to the stock exchange. If matched with a seller, the trade is completed.

9.   Track Your Investment
Monitor your share prices, profits, and losses through your broker’s app or website.

What Are the Risks Involved in Buying Shares?

The information below is taken from a Business Standard article.

Let’s say Amit, a teacher from Jaipur, invested ₹2,00,000 in shares through monthly SIPs in 2024, trusting the market’s growth. But global investors pulled out ₹15 billion, and the Nifty 50 fell 14%. Amit’s portfolio dropped to ₹1,72,000 — a ₹28,000 loss. 

He didn’t know the market could go down or how to check if shares were expensive, but foreign investors had better tools and more knowledge.

Key Points:

• Markets can fall: Even if SIPs are steady, markets fluctuate.
• Global exits matter: Foreign withdrawals impact Indian markets.
• Retail investors lack tools: Most invest on trust, not research.
• Losses hurt savings: Small investors face a big emotional/financial impact.
  
  

Table: Retail Investor Risks

Tips for First-Time Investors:

The information below is taken from an Economic Times article.

For Example, Ananya, a 25-year-old software engineer, wanted to invest ₹1,00,000 in the stock market for the first time. She researched the past 10-year returns. She saw BSE Consumer Durables gave 22.97% CAGR, Capital Goods gave 17.67%, and IT gave 14.84%. 

She split her money: ₹40,000 in Consumer Durables, ₹30,000 in Capital Goods, and ₹30,000 in IT. Her goal was steady, long-term growth with less risk.

Key Pointers:

• Start with stable sectors like Consumer Durables, IT, BFSI, and Capital Goods.
• Look at past returns, future trends, and expert advice.
• Large-cap and blue-chip stocks are safer for beginners.
• Diversify your money across 2–3 sectors to reduce risk.
  
  

10-Year Sector Performance Table

Conclusion

Buying shares is a smart way to grow your money. You just need a PAN card, Demat and trading accounts, and a trusted broker. Learn about good companies before you invest. Start small, spread your money across different sectors, and be patient. Prices may go up or down, but with time and care, your money can grow. Start today!

FAQs

Q1: What do I need to start buying shares in India?
You need a PAN card, bank account, Demat and trading accounts, and a SEBI-registered broker.

Q2: How do I choose which shares to buy?
Research company performance, sector growth, and financial ratios before investing.

Q3: Can I lose money in the stock market?
Yes, share prices can fall due to market risks, company issues, or global events.

Q4: How can beginners reduce risk while investing?
Start with stable sectors, diversify across industries, and avoid emotional decisions.

Q5: Do I earn money only when share prices rise?
No, you can also earn through dividends if the company shares its profits.

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