Fullerton
While the Demat account is indispensable for investing in the capital markets, it also serves the critical purpose of storing investment instruments in electronic form. This ‘Dematerialization’ of shares, allows traders/investors to invest, trade faster and easier than say, physical documents.
6 Significant Things to Know Before Opening a Demat Account
1) Need For A Demat Account?
Store your securities and shares in electronic/Digital form, and eliminate the need to fill or maintain physical docs. It increases the investors’ speed and accessibility, resulting in safer and more secure trading. Demat allows you to store a variety of investments such as equity, ETFs, mutual funds, and bonds.
A Demat account is a more sophisticated version of your savings account.
2) Different Types Of Demat Accounts
There are three options for Demat accounts available to Indian investors.
- Regular Demat Accounts are the most popular option for investors who reside in India
- Non-resident Indians can apply for a ’Repatriable Demat Account’, which must be linked to an NRE (Non-Resident External) bank account.
- There is also a ‘Non-repatriable Demat Account’, which is available to non-resident Indians and must be linked to an NRO (Non-Resident Ordinary) account. It, however, does not allow you to send money overseas.
3) Application For Demat Account
You’ll need to provide a variety of documents to open a Demat account, these are,
1. Proof of Identity (POI)- (E.g.: PAN Card, Driving license)
2. Proof of Address (POA)- (E.g.: Passport)
3. Proof of Income – (For trading in derivatives such as F&O) (Eg.: Copy of ITR Acknowledgement)
4. Proof of Bank Account (E.g.: Cancelled cheque)
5. 1 to 3 passport size photographs
4) Choosing A Broker
It’s imperative that you choose a broker with a broad service portfolio and experience while opening a Demat account. This can be a relationship of a lifetime, so select a broker who can generate wealth for you.
There are two distinct types of brokers:
1. Discount Broker: A discount broker will provide you with the basics you need, execute your instructions, and give you access to equity and derivatives trading services, among other services.
2. Full-Service Broker: A full-service broker can provide a wider range of options and support services, such as portfolio management and advisory services, apart from trading and investment.
5) Brokerage Charges
All brokers charge different account opening and brokerage fees. When it comes to trading (buying and selling), most brokers charge a fee for opening an account. Don’t forget to take into account the transaction fees in your decision before opening a new Demat account!
6) The Right Trading Platform
Last but not least, for intraday trading, you will need an accomplished trading platform for a faster and simpler trading experience. Use the ‘Guest User’ option to check out the App. See how fast you can navigate between charts, research, and order screens.
Wrapping Up
Investing and planning your financial future is crucial in this day and age. Demat accounts help you participate in pushing the economy forward, taking advantage of it, and planning your financial journey. Select the right broker, gauge your risk profile, know your goals and start investing.
