How can I start investing in financial market in India?

Bank savings and regular income cannot be enough for wealth creation. Investment in stock, debt markets and even commodities can help grow you wealth and even prove to be an added source of income. Most importantly, unlike most fixed income assets such as bank fixed deposits, equity investment can help beat inflation.

There are various ways to invest in the financial markets in India.

Secondary market
Secondary market is the market where already issued financial instruments such as bonds, shares, etc are bought and sold.

Primary market
Primary market is the market where a company or government floats its securities for first-time buyers. Initial public offerings are one type of primary market issuances.

Bonds
Companies need funds to undertake projects. If they borrow this money from banks, it is called a loan, which requires them to make regular interest payments. However, if they raise money from multiple investors against timely interest payment, they are called bonds. When you invest in bonds, it shows the face value of the bond, the coupon or the interest rate and the maturity date.

Mutual funds
Through mutual funds one can indirectly invest in bonds or equities. Mutual funds pool money from different investors and then invest them in various financial instruments such as stocks, bonds and gold. The advantage of investing through mutual funds is that the fund houses do the hand-holding for inexperienced investors and minimise risk by diversifying the investment across asset categories.

Derivatives
Derivatives help trade in futures of equity or commodities or currencies at a price fixed today. Derivatives come in handy to hedge future market risks, as they have a fixed price for a future date unlike share prices that keep fluctuating every day.