Factors to consider when opening a demat account
A demat account holds digital copies of security certificates.Investors benefit from the electronic storage of assets provided by demat accounts.. One can open a demat account pretty easily too. Several firms are now providing demat accounts with various facilities. Well-known firms offer various facilities when you open a demat account with them. So, checking up on a few things before opening the essential demat account is worthwhile.. Here are some key elements that you should always keep in mind.
Whether the brokerage firm is registered
You might already be aware that financial organizations called Depository Participants (DPs) to facilitate the opening of demat accounts . Although the Depositories are responsible for storing and maintaining demat accounts, investors can’t open their accounts directly with them. So, the market regulator, the Securities and Exchange Board of India (SEBI), gives licenses to DPs for providing demat accounts. Therefore, investors should always open their demat accounts with registered brokers only. A registered firm will likely follow all the rules and regulations that SEBI and other government agencies set. This is crucial for the safety of your investments. Hence, get the details of a stockbroker from SEBI’s website or its linked depository. Check its authenticity before you open demat account with it.
The efficiency of the trading platform
Stock market investments involve several transactions. As investors, we often feel tempted to invest in various assets simultaneously. The urge to beat the market is a common phenomenon among many individuals. So, smooth transactions become a bare necessity that we can’t compromise upon. Thus, a demat account must be powerful enough to handle f all our stock market transactions without hiccups. It should contain a robust technological backing that drives its system interface. Modern software systems should be present to make the platform powerful enough to fulfil most of our needs. Remember, only an efficient platform can help us trade conveniently and without much trouble.
Access to various market segments
The best thing about the share market is that it opens a window to a world of many possibilities. There are numerous kinds of securities to invest in the share market. Financial instruments such as futures and options, exchanged-traded funds or even Initial Public Offerings (IPOs) are also quite rewarding apart from the popular equity market. In fact, an investor or trader can realise the full potential of share market investments only if he has a diversified portfolio spread across different market segments. A demat account should let us participate in trading all these types of assets. Limiting our access can undermine our scope of returns on investments. Open a demat account that facilitates investing in every asset class.
Well, most of the DPs do provide free demat account openings. Yet, the list of expenses incurred on a demat account doesn’t end here. Stockbrokers usually levy several other charges. These include costs for demat account maintenance, known as Annual maintenance charges (AMC). The primary share of the expenses consists of AMC and delivery charges for securities. While the AMC is billed annually, delivery charges are applicable every time you buy an asset. In addition, the security transaction charge (STT), debit transaction fees, intraday trading fees, stamp duty, etc., also form a substantial amount. So, check the charges accompanying a demat account whenever you approach a DP to open a demat account. Higher charges will eat away your profits.
Quality of support services
A demat account should be rated based on more than just storage and transaction of securities. Ancillary services like stock market data, price action charts, critical indicators, and real-time alerts also play a significant role. These features make investing comparatively simpler. The online tools are quite productive in obtaining the required information to make appropriate trades. Moreover, a broker must provide a 24*7 customer support facility. Technical glitches are common and abrupt. A firm must keep a dedicated team to assist investors whenever required. It is the responsibility of a financial institution that provides demat platforms to resolve its customers’ issues in time.
Demat accounts are critical to share market investing. So, you must analyse the above points before opening a demat account. Inquire about the services on offer and check for yourself whether they satisfy you. Contact several brokers and ask detailed questions. Evaluate your choices and prefer established firms like Share India, with a reputation for providing excellent services. The firm offers a bundle of services along with its feature-loaded demat account. Leveraging sophisticated technologies, the demat account enriches the platform with several useful features. Notably, the charges of trading are minimal too.