A Demat Account is necessary when you wish to invest in Equity, Mutual Funds, Non-Convertible Debentures (NCDs), Government Bonds, and the likes! First things first,
What is a Demat Account?
Demat Account/Dematerialized Account acts like an online vault for the securities you have purchased. Your Demat Account is managed by a Depository.
There are two in India –
National Securities Depository Ltd (NSDL) and
Central Depositories Services India Ltd (CDSL)
However, it is important to mention that you cannot directly open a Demat Account with the Depository, you have to do so with a Depository Participant. A Depository Participant or a DP could be a Broker, Financial Institution, Bank, etc.
In this article, we’ll focus on the things you need to consider when opening a Demat Account with a Broker. Why Brokers? Because given the nature of the Demat, a Brokerage firm offers a plethora of associated services, as compared to a bank or any other financial institution.
Let’s get down to the factors you need to take into account when choosing a broker to open a Demat Account online.
Type Of Broker
Yes, the ‘broker type’ is important and there are two kinds that you can open a Demat Account with. A Full-Service Broker and a Discount Broker.
1. A Full-Services Broker provides you with a set of integrated services that facilitate a seamless investing or trading experience across the capital markets.
2. A Discount Broker, on the other hand, provides you with a trading platform and a flat brokerage charge.
Ideally, a Full-Service Broker is well-suited to both a beginner and an expert in the stock market, since they provide additional services like Research Calls, Relationship Managers, Call, and Trade Facility, and Trading Platforms, in addition to many others.
What Are the Charges?
There is the Custodian Fee, Demat AMC Charge, Account Opening Fee; which are naming the standard few. These charges may vary from broker to broker and are nominal in most cases.
A thorough comparison is advisable before you commit to opening a Demat Account with a broker. Another fee is the Brokerage, which is levied on your trade transactions.
When you look at it, normally a discount Broker will charge less as compared to a full-service broker. This is so because the Full-Service Broker also provides you with a full set of comprehensive services to make your investing journey more convenient.
Have a go at the services offered by the Full-Services broker before you decide to call the shots on whether it is well worth it or not based on brokerage.
Are They Supportive?
Yes, it is an important criterion. When it comes to matters of money, no one likes to be kept hanging. A good support team is crucial when choosing a broker to ensure that at any time when nuisance strikes, you are backed up and well at that.
Apart from looking at the support team ratings and feedback, have a look at what mediums the support is provided on. Phone, chat, and email sounds good; but a local office, a dedicated relationship manager, or a back-end support team takes top place. It may be just the right answer to your woes.
Is The Trading Platform Feature-Rich?
Check if the broker provides you with a trading platform that is compatible with the device of your choice. No one likes hiccups in the middle of a mindful trade. The second thing to check off your list is the features.
Innovation is necessary, and you must look at the features that enable you to have a simple or convenient trading experience, rather than unnecessarily complicate stuff. UI is extremely important, check to see if it is clean and easily navigable.
Does it have hands-on features that keep you updated about your portfolio, price, and orders at all times? Does it make the whole experience easier? Does it provide the necessary data that may help you make informed decisions on one platform? Asking yourself these questions is important before you take the first step to open a Demat Account.