Trading in stocks and securities is an attractive investment option as it can result in high returns. To gain big, you need to have an appetite for risk, and must be willing to play the market. To begin trading in the stock market, you need to have a Demat account to hold your stocks and securities.
Since there are a multitude of Depository Participants (DPs) offering trading accounts with different features, choosing the best demat account can be challenging.
There are a few factors to consider when opening a demat account. There is more to the demat account than mere shareholding, and it is important to know all you can. Here are some factors that you must take into consideration when deciding about the right Demat and trading account for you.
The Securities and Exchange Board of India (SEBI) has directed all DPs to follow a set procedure to allow investors to open a demat account. However, they can simplify this procedure by adopting certain methods.
For instance, the e-KYC process makes the entire account opening process online so that you do not have to visit the DP’s office physically. Under the e-KYC provision, you can complete the verification process by yourself using your device’s camera.
While you can begin trading only after five days with a physical account opening, an online account opening brings this to two days. So, the right option for you would be the one that offers an online account opening facility.
If you are searching for the best trading accounts in India, you must consider the user interface (UI). Every DP has its own software that you can download for trading purposes. The user interface is very important if you engage in intraday trading, as you need to place orders and sell them quickly.
The Demat account will have a fast and seamless trading platform. It will help ensure that you place orders and sell stocks without any hassle. So, when researching different demat accounts, check for user reviews and ratings.
Moreover, most DPs today allow you to trade from multiple access points. So, check if a particular service provider enables you to trade from different channels, like websites, web-based applications, mobile apps, etc.
Irrespective of whether you make a profit or your account is active or not, trading and investing in stocks will attract some charges and fees. These may include:
Account opening charge
Account maintenance fees (charged annually)
If you are looking for the right Demat account, assess these charges and fees. Choose a DP that has low demat fees and brokerage charges. This would allow you to maximise your returns.
DPs are now evolving themselves by onboarding data analytics technologies. Hence, the Demat account should feature data analysis and other such tools to make investing easier.
For instance, DPs provide many online data analysis mechanisms, which include:
Inflows and outflows analysis
These economic trends are significant in determining the right investment decisions for you. So, the best Demat account option for you will provide most, if not all, of these features.
When analysing for the most suitable Demat account, you must also look at different categories of such accounts. Different categories of these accounts cater to varied types of investors. The following are different types of Demat accounts:
Single Holding Account: A single holding account, as its name suggests, is where you are the sole account holder.
Joint Account: This type of account allows a maximum of three persons to hold the Demat account jointly.
Corporate Account: This is a Demat account that can be opened by a corporate body or an organisation.
NRI Account: This type of account allows Non-Resident Indians (NRIs) to trade in Indian equities and debt markets. There are two types of NRI accounts: repatriable and non-repatriable.
While the former allows the holder to transfer funds abroad, the latter does not provide this facility.
To judge if a DP is appropriate for your investment needs, inquire about the quality of their service. To zero in on the right demat account, try establishing the following:
The time taken by the DP to dematerialise your physical share certificates
If the DP credits your demat account automatically with corporate actions
DP’s efficiency in dealing with issues related to complaints, liens, and pledges
In conclusion, if you wish to start trading in stocks and securities, you will need a demat account. However, you need to do a bit of research and find one that best suits your needs.
In general, the right choice will be the one that has the features you want, and charges minimal brokerage and account maintenance fees.
Yes, most DPs offer the facility to open a demat account online from the comfort of your home.
While it may vary depending on the DP, most quality and eminent DPs do not charge any demat account opening charges.
SEBI has mandated a list of documents that you need to submit when opening a demat account. These include PAN Card, Aadhar Card/Driving’s License/Voter ID/Passport/Ration Card for verifying your identity and address.
In addition, you will also be required to submit ITR Statements, recent photographs, and a cancelled cheque to verify bank details.
Yes, you can open multiple demat accounts. However, note that you are only allowed to open one demat account with each DP.