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Top 5 Stock Brokerage Companies
Zerodha is India’s Largest stock broker in terms of total active clients base. The discount broker is active since 2010. Here is a comprehensive review of this discount broker, as well as its products, offerings and services. Read More
Angel Broking is one of the leading full service broking houses in India. Lets have a detailed Angel Broking Review & get good understanding of Angel Broking Demat Account, Angel Broking Brokerage Charges, Angel Trading Platforms & other important features. Read More
IIFL / India Infoline
IIFL Review, customer ratings, brokerage charges, brokerage plans, offers, products, services, trading platforms, customer support, advantages, demat account services, trading account services, and many other features as well. Read More
Motilal Oswal Securities Ltd. is a Mumbai based company that was incorporated in 1987. They have a reputed name in the world of financial services providers providing services across Institutional Broking, Private Wealth Management, Retail Broking and Distribution, Investment Banking & more. Read More
Sharekhan is one of the largest full service broker based out of Mumbai, India with over 1.4 million client base. Sharekhan, as the name resembles is a beast in the Indian equity and derivative trading terrain who were in fact, one of the first to introduce the Indians with the concept of online trading. Read More
FAQs on Online Demat account opening
1. Which is the best bank for demat account?
An investor or a trader needs 3 accounts to invest/trade in the stock market in India. This includes:
- Bank Account
- Trading Account
- Demat Account
And the answer for the best bank is totally dependent on the ease of access to the service, for instance, Zerodha provides IDFC FIRST Bank 3-in-1 account which has all services to deal with at a single place. The process for open demat accounts online is also easy with minimalist documentation.
2. How does demat account work?
A demat account works similar to a savings bank account. While in a savings account, you can store cash in electronic form with a bank, in a demat account, you can store securities with a depository participant (DP) affiliated to the NSDL. The demat account allows you to hold shares and securities of various companies electronically. When you buy shares or securities, those are credited to your demat account and debited when you sell them.
When you buy shares using your trading account, the money is withdrawn from the linked bank account and the shares are deposited in the linked demat account.
3. Is demat account free?
Yes, demat account is generally free, but a trader or investor does not require only a demat account, he/she needs a trading account as well, so if you see, all top brokerage in India will have a banner of free demat account but when you go for online demat account signup, then you can see charges of Rs. 300-500 which varies as per company and being charged for trading account, so technically it is not free.
There might be some companies which do not charge AMC for the first quarter when you open an online demat account and online trading account, but charges are always there, free term is generally used as a part of promotion, nothing more than that.
4. Is a demat account safe?
This question would have been very relevant if asked in 2006 or at the time of Harshad Mehta, but now there are multiple guidelines issued by SEBI and both depositories. The shares bought by the investors are electronically stored with the depositaries. In India, there are two depositories namely CDSL and NSDL.
The brokers are just an intermediary between the investors and the depositories. They are not supposed to hold the shares in their pool account beyond a stipulated time frame. The compliance regulations are highly tightened and the SEBI/exchange watches over the brokers through the ISC (Investors Service Cell) team.
Thus even in the case of brokers’ default/abscond, the shares held in the demat account will be safe. They are as safe and secure as any asset can be. But, eternal vigilance is the price you have to pay as an investor.
5. Is SBI demat account free?
State Bank of India is India’s largest bank. SBI provides a wide range of products and services through its subsidiaries.SBI Demat Account is a key offering by the bank. SBI offers demat account related services through SBICap Securities Ltd (SBICap or SBICapSec). Incorporated in 2006, SBICap provides broking, investment and loan products. It offers these services to individual and institutional customers. It is a SEBI registered depository participant (DP) with CDSL and NSDL.
Demat Account Opening Fees – Rs. 0
Demat AMC – Rs. 350
6. Can I have 2 demat accounts?
Yes, you can of course have multiple Demat accounts.
Many expert traders usually have more than one trading account. On some they trade with small accounts usually to test their own strategies and the others they use to actually invest and trade their main capital.
The only thing is that you can only participate in a company’s IPO with just one account as two accounts with the same PAN number cannot choose to apply for the same IPO.
Apart from that, the only thing is that you’ll have to pay account maintenance charge for each of the accounts. Which of course you should be able to manage because you have two accounts only when you actually have expertise in the field and make a good amount of profit.
7. What is the minimum balance for a demat account?
The minimum balance for demat account is Zero. After all demat account does not carry money, it carries shares in dematerialized form and on the other hand trading account has money through which one does his/her trading.
There is no minimum balance that needs to be maintained in a trading account with any broker, you can transfer those shares to the new demat and sell them using your trading account. You will have to send a written request to get the account closed or you might get charged by AMC after a year.
8. How can I withdraw money from my demat account?
There are two types of accounts used in trading.
- Trading account
- Demat account
Trading account is where the actual cash (funds) flow happens. This account gets debited/credited whenever you buy/sell stocks. Therefore, if you wish to withdraw funds, then it can be done from the trading account, not Demat account.
Demat account is a place where the shares are stored electronically. It does not deal with any cash transaction.
To withdraw funds from the account, the broker gives you an option to place a payout request either through a Back-office portal or via email (varies from broker to broker).
5 Deadly mistakes to avoid while trading
Trading is not an easy task as there is no signal road to success. You have to find your own way to success from the instruments you choose like trading account online, strategies or indicators you follow, and many more, the combination of all things will be different for every trader. All these depend on the trader’s choice, interest, influence, how one’s mind works, and many more. Some traders trade according to the news while some trade according to certain indicators.
So there are different roads to success but the motive of all is the same, that is to earn money. In this article, we will discuss 5 deadly mistakes that need to be avoided while trading as can prove to be very costly. It’s important that you mustn’t make a habit of them and learn from both your mistakes and success. Keeping this in mind let’s dive into the 5 deadly mistakes to avoid.
No predefined trading plan
The first deadly mistake a trader makes is trading without a plan. You need to have a written predefined plan before you make a demat account which acts as a blueprint during your time in the market. It should contain strategies, commitment, and the capital you can invest in. The trading plan should be the foundation of your position.
Not understanding leverage
Leverage trading is a system which allows the trader to open positions or trading account opening larger than their capital. Leverage refers to the ratio between position value and investment needed. Trading with leverage is a dangerous way to believe you can earn money quickly. It’s very important to understand the implication of leveraged trading before opening a position. Limited knowledge of leverage can wipe out all your account value. So traders need to be very careful while selecting the level of leverage and the broker.
Ignoring the indicator
Technical indicators in trading platforms tell you the story of the stocks and you should not afford to miss it. These indicators can be used to your advantage with proper evaluation of them. It helps you to forecast the price or look at past trends and indicate momentum. and help to strategize your decision. When the indicator tells you “the trend is close to the top, take your profit”. It means you need to get you off the trade. You need to understand all the basic trading indicators before opening a trading account online.
Lacking Money management skill
Having the right money management skill is one of the most important traits of a trader as it can make or break the position of traders in the market. Poor money management skills can cause many errors such as managing risk and leverage which can blow up your position in the market. Risking between 1 to 2% of your portfolio is the best way to go as you can be able to trade up and make up for the loss on some other day even if you lose the bet.
Not understanding risk to reward ratio
Most traders do not calculate their risk to reward ratio before opening the position. It is the most important aspect which every trader should take into consideration. This helps traders to estimate whether the end profit is worth taking the risk of their capital. There is no magic number, every trader has their own comfort level of determining their risk to reward ratio number.
Lastly, don’t let your emotion make your trading decision. Emotions such as excitement, despair, disappointment after a good or bad day could affect your decision-making power and can deviate your way from your plan. Every trader makes mistakes and should learn from the above-mentioned mistakes. The main take away from this article is that you should do research, practice, learn, and make proper plans and to keep your emotions under control from clouding your decision. If you have decided to enter the trading market, I have a perfect trading platform for you, Zerodha.
Zerodha is the ideal for traders and investors as you can save a broker charger with its simple platform to use. Open demat and trading account online, no paperwork needed.
9. Can I transfer my demat account?
Yes, you can always transfer your share from one demat account of one broker to another demat account of another broker, just like a bank, where you can transfer your money from one account to another bank account.
No, a person cannot transfer his demat and trading account, since every broker has a different set of alpha-numerics for their account, just like a bank has a different set of numbers and alpha-numerics for its IFSC Code. However, you can always transfer your share from one demat account of one broker to another demat account of another broker, just like a bank, where you can transfer your money from one account to another bank account.
10. Which is the best demat account for beginners?
A stock broker account enables you to invest in stocks, mutual funds, IPO and bonds. Finding the best brokerage firm in India for stocks is challenging especially if you are a beginner or new to stock exchange.
There are two types of stock brokers in India; full-service stock brokers and discount stock brokers.
If you can trade by yourself using the mobile app or trading website, it is recommended choosing a discount broker.If you are a beginner, you should consider 2 important charges; Demat AMC and brokerage charges for equity delivery.
This list compares the top 5 stock brokers who charge less and provide excellent online stock trading services:
- Alice Blue
11. Can I buy stocks without a demat account?
To be an investor in the stock market in India, having a PAN card and Aadhar card along with a DEMAT account is a mandatory requirement. Without that one cannot get registered to start trading with the NSE or BSE.
Another optional requirement for trading if you are new to trading is to get a broker who can do the trading bit for you. These are SEBI authorised individuals who do trading directly on the stock market. They do your trading in exchange for a small brokerage fee.
12. What to know before opening Demat account?
Opening a dematerialisation or demat account is the primary requirement that you need to fulfil if you want to invest in the stock market. No transaction of buying or selling is possible without a demat account. You must sign on the agreement papers that include a ‘specific’ power of attorney (PoA) to the broker. In this article, we will discuss some of the things that you must consider before opening a demat account.
Opening a demat account could be one of your best investment decisions as you can now trade in the equity market and fetch high returns. However, just like with any other purchase, it is necessary to be aware of the factors that could make it a good or a bad purchase. Now that you know about the things you must consider, you may want to open your demat account with a reputed broker like Kotak Securities and make your investing easier.
13. Can I open only my demat account?
Only demat account is of no use if the trading account isn’t opened. This is because a demat account is used to store your securities whilst a trading account is used to buy/sell the securities. Needless to say, unless you trade securities you cannot store them in a demat account.
However let’s look at the following cases,
Case 1: You can open only a trading account provided you link your existing demat account with your new broker.
Case 2: You cannot have only a demat account since the trading account is mandatory for trading securities.
14. What is the minimum amount to invest through demat account?
Zero, it is quite possible that you do not trade at all with your trading account, but that would be futile. There is no restriction on minimum buying and selling in case of Shares, you can buy even 1 share. However, in the case of Futures and Options, there is a lot size which you can invest in, and you have to buy a minimum lot of 1, and every lot has a different number of shares, which has already been defined by the stock exchange.
15. Can I buy an IPO without a demat account?
No. Not only you can not apply in IPO if you do not have a Depository Beneficiary Account ( also known as Demat Account ) but also you can not sell / transfer physical shares you are already holding . From 1st April 2019 , transactions in shares of listed companies are permitted in dematerialised mode only except case of gift and transmission .
16. What are the types of demat accounts?
Regular demat account: A regular demat account is needed for investors who reside within India. The account is ideal for those who deal with equity shares alone.
Repatriable demat account: This type of demat account is meant for non-resident Indians (NRIs). It allows the transfer of wealth abroad. However, such types of demat accounts require a Non-Resident External (NRE) bank account.
Non-repatriable demat account: This type of demat account is again for the NRIs. However, you cannot transfer funds abroad. You must also have an NRO bank account linked to the demat account.
10 Easy way to earn BIG in Share Market
Every trader or investor who comes to the share markets and opens a demat and trading account with a desire to earn more money. The share market is one of the most remunerative platforms for making money as it offers better revenues than others. Many of the traders fail to earn money in the share market because of a lack of knowledge and experience. Nothing in the share market is predictable, every moment in the share market is governed by many factors which are situations and not in anyone’s control.
It’s essential to know how to make money in the share market because people lose more money in the share market than in any other market.
Here are some ways which will help you to earn big in the share market.
- Know your trader type
It’s important to know what kind of trader you are before opening a trading account online.
In the stock market, there are two types of traders, one who follows fundamental investing while the other one is a speculator. Ther investors who follow fundamental investing are more interested in the fundamental strength of a company while the speculator is more concerned about the price of the stocks. Fundamentally investing is the best way to earn money in stock marketing.
- Proper financial plan
It is important to ensure your financial health is in good and proper condition before you open online demat account and start investing in the share market as you need to maintain and meet daily routine expenses. Investing in long term investment means a long commitment to it. You need to meet all your emergencies and short term needs during this commitment. Not having a good financial position can cut into your share investment.
- Invest only if you have surplus fund
It’s always best to invest your surplus funds in the share market because of its volatile nature where the share prices swing either way and have a high risk of losing your investment. With surplus you can easily eliminate the risk of getting into debt. It’s not essential that you will lose your money, you can even gain a huge profit from your investment. Nothing is a hundred percent sure.
- Avoid the herd mentality
The decision to buy or sell the share of most of the traders are influenced by their friends and relatives. Traders should avoid this practice as it doesn’t work well in the long term. One should not invest their hard-earned money on the influence of others.
- Invest in business, not in stock
Invest your money on the business you understand, not in stock. Investors need to know about the company they want to invest in, what they buy and sell, how they make money etc. This helps you to monitor your invested money in a better way. In short, when you want to invest in a stock you should not look at the stock or their price but the business of the company.
- Invest in a disciplined approach
It is always beneficial to invest systematically and with patience in the right share. Several investors have lost their money even when the market had an upward trend due to the volatility nature of the share market. But on the other hand, the investor who has invested their funds in a disciplined manner has generated outstanding revenue.
- Have a broad portfolio
With an online demat account you can diversify a portfolio across asset classes helps you to lower overall risk and earn an optimum return. The type and kind of diversifying the portfolio vary on the investor and helps you to cope with the volatility of the share market.
- Invest with a safety margin
Investors should invest with a margin of safety for the betterment of their financial health. It is always safe to purchase a share with a higher safety margin even when the price of the share is low as it lowers your possibilities of losing your money even though the business didn’t turn out to be a good investment.
- Take informed decision
Investing in the share market is very different from investing in funds such as PPF or mutual funds as the risk of losing your investment is more in the share market due to its volatile nature. So investors need to do proper research before they open a trading account online and start investing money on it.
- Rigorous Monitoring
Any event happening in the world has a direct or indirect impact on the share market. Investors need to be in regular updates with news and company-related events which may impact the price of the shares. So traders need to keep monitoring their portfolio and keep affecting the desired changes in it.
Every investor wants to earn money from the share market irrespective of the level of their experience. Above mentioned are some of the time tested strategies to earn big from the share market. But with a perfect trading platform i.e Zerodha, you can emerge as a winner of the share market. With Zerodha online account opening will make trading in the share market less time consuming as you can trade all by yourself without the assistance of the broker with Zerodha. You can open a demat and trading account online without any paper with ease.
17. Where should I open demat account?
Zerodha is one of the best discount brokerage firms, where you can open a demat account. Demat account opening fee in Zerodha is also very less that is only RS.300 (Rs. 200 for Trading and demat account, Rs. 100 for commodity account). It also offers the best demat and trading account with a great user interface. It is a discount stock broker that offers zero brokerage on equity delivery and a low flat rate on intraday trading.
18. Can I open demat and trading account without a broker?
Yes, you can open a demat account without a broker. This can be done with the help of any depository participant (DP) such as banks. Many banks provide the client with the facility to open a demat account through their 3-in-1 scheme i.e. savings, demat, and trading. It is not possible to trade your shares in the stock market unless you have a trading account.
19. Is there any free online demat account?
Yes, there are various firms in India which are providing demat accounts for free of cost. As they are providing demat accounts at free of cost their annual maintenance charges (AMC) are too high. So rather than going for free demat account opening it is also important to see annual maintenance charges of brokerage firms.
20. Is a demat and trading account safe?
Yes, demat and trading account are as safe and secure as any asset can be. But, eternal vigilance is the price you have to pay as an investor.. But just saying that the shares are safe with the DP is to miss the core point. There are numerous cases where shares have got debited to demat accounts without the knowledge of the holder.
21. How can I open online demat account?
To open an online demat account you have to go to the official website of the brokerage firm where you wish to open the demat account. Then from that website you have to select the option of ‘Open an account with us’. Once you click on it, you will land on the account opening page, then by following the mentioned account opening process you can open an online demat account.
22. How much time does it take to open a demat account?
It takes one or two days to open an account once the brokerage firms receive the online demat account application. Any discrepancies in the submitted form or documents would delay the demat account opening process. The applicant receives a confirmation email once the demat account is opened. These emails are followed up by the credentials to login to the trading application.
23. What documents are required to open a demat account?
To open an demat account you will require a attested copy of PAN card, for identity proof you require the documents like driving License or Voter’s ID or UID or Unique identification number, for address proof you require the documents like Voter’s ID or Passport or driving license, for income proof you require the documents like Salary Slip or or Bank account statement for last six months, and Cancelled cheque can be provided as a proof of bank account.
24. Do I need to pay commission or service charge for every single share trading transaction on online demat account?
No you don’t have to pay commission or service charge for every single share trading transaction on an online demat account. But you have to pay commission or service charge for every transaction which you are doing.
Top 10 Stock brokerage companies in India
What is a Stock Brokerage Company?
A stock brokerage companies are financial institutions that facilitate the process of buying and selling the stocks for their clients. They provide this service for a fee or commission. The professionals who are employed in these firms, and execute the buying and selling orders for stocks and other securities for the clients are known as the stockbrokers. They also provide other services like intelligence, research, investment strategy, etc. They are authorized members of the stock exchange (BSE, NSE).
There are two categories of stockbrokers:
- Full-services brokers
- Discount Stock Brokers
In this article, we have compiled the list of the top 10 stock brokerage companies in India.
Zerodha was founded in 2010 and offers financial services like retail and institutional broking, currencies and commodities trading, mutual funds, and bonds. It became the largest broking firm of India in 2019 when it had a client base of 8,47,016. Currently, it has a client base of about 1941293. In the last month, i.e. June 2020, Zerodha entered the unicorn club with a self-assessed valuation of $1bn. It charges a fixed brokerage of Rs. 20 per trade. The company is popular for its product innovations and digital initiatives.
Zerodha Account Opening Charges:
Equity account opening: Rs. 200
Equity and Commodity: Rs.300
Zerodha Annual Maintenance charges are Rs. 300/ year.
- ICICI Securities Ltd.
ICICI Securities Ltd. was founded in 2000 and is one of the largest brokerage firms in India. It provides investment services such as online and offline share trading, buying and selling of mutual funds, demat account, portfolio management services, insurance, fixed deposits, and loans. It has a customer base of around 1118835. It charges a fixed amount for account opening and then annual maintenance charges for online demat account. The brokerage amount varies from 0.5% to 0.75%.
- HDFC Securities
With around 729,868 of clients, HDFC Securities is also one of the largest brokering firms of India. Established in 2000, HDFC Securities falls under the umbrella of HDFC Bank. Along with offering stock broking services, HDFC securities is also a distributor of financial products.HDFC Securities provides a 3-in-1 Online Investment Account which is a combination of HDFC Bank Savings, demat and trading account.
- Angel broking
This is one of the oldest stockbroking firms of India, which was established in 1987. The company is a member of BSE, NSE, NCDEX, and MCX. They offer services like online stock broking, depository services, commodity trading, and investment advisory services. They also offer wealth management solutions such as personal loans and insurance. The company started its Portfolio Management Services (PMS), IPOs business, and Mutual Funds Distribution (MFD) arm in 2006. The company publishes research reports on areas related to investment broking. The current customer base of the firm is 766811.
- Motilal Oswal
Motilal Oswal Financial Services Ltd. is a diversified financial services firm offering a wide range of financial services and products and established in 1987. The firm is listed on BSE and NSE. It offers products like institutional broking, asset management, wealth management, investment banking, home finance, equities, commodity broking, etc. it is one of the best share brokers in the full-time category. The current customer base is around 412137.
Sharekhan is a pioneer of stockbroking and one of the oldest stock broking companies in India, which was established in 2000. It has experience of 20 years in the industry. According to research, this brokerage firm has been ranked as the second-best stock brokerage firm of India in full-time brokers. It has a customer base of 5613191. Its charges range from 0.015% to 0.1%.
5paisa Capital Ltd. is a discount broking company of India. It has a current customer base of 565778. It is a member of NSE, BSE, MCX, MCX-SX. It was founded in 2010 and provides retail broking, currencies and commodities trading, mutual funds, IPO, and bonds. The trade account opening and the first five trades are free of charge.
- Kotak Securities
Kotak Securities offers a 3-in-1 online dmat account. It offers online trading with features like stock recommendations, live share market updates, and mobile tracking. The company has well invested in technology. However, it does not offer commodity trading. It is a member of BSE and NSE. the current customer base is 638807.
RKSV, known by its brand name Upstox, is one of the fastest-growing retail firms in India. It was established in 2006. The company offers investments in stocks, futures, options, currencies, and commodities. It holds membership with NSE, BSE, MCX, and MCX-SX. The current user base is 777754. It offers free demat account and trade account opening.
- Axis Securities Ltd
Axis Securities Ltd is a subsidiary of Axis Bank, and was established in 2011. Axis Direct provides a 3-in-1 Online Investment Account. The current customer base is 302150. It offers equity, derivatives, commodities, mutual fund, SIP, ETFs, Tax Savings, Fixed Incomes, and IPOs.
The list consists of the best 10 stock brokerage companies of India, which have established themselves as the best names in the industry. At the start of investing, it might prove difficult to select the best company to open demat account online. However, this list helps in shortlisting the one best suited for your interest and investment portfolio.
25. How can I withdraw money from my Demat account?
Demat account is a place where the shares are stored electronically. It does not deal with any cash transaction. To withdraw funds from the account, the broker gives you an option to place a payout request either through a Back-office portal or via email (varies from broker to broker). You have to enter the amount you wish to withdraw in the withdrawal amount filed and then you can receive your money from your demat account.
26. Can I open Demat Account without a PAN Card?
The PAN Card is mandatory to open a demat account. This is as per the SEBI circular dated April 27, 2007. Irrespective of the investment size or objectives, an individual has to submit the PAN Card to open the demat account.
An exception is given to the scheduled tribes belonging to certain parts of Northeast (Arunachal Pradesh, Mizoram, Nagaland, Manipur, Tripura and some areas of North Chachar Hills in Assam) in respect to income tax on their earnings. People from these tribes can open a demat account without PAN card if they are planning to invest a maximum of ₹50,000 in Mutual Funds.
27. How many Demat Accounts can be added to my Trading Account?
Most stock brokers in India allow you to add up (link) to 5 Demat Accounts to your trading account. It is important to know that each of these demat account should have your name as primary account holder.
Following things you must have to consider –
- An individual can have one and only one PAN Number.
- An individual can open as many demat accounts as he wants.
- An individual can open multiple trading account with different brokers
- An individual can online only one trading account with a broker.
28. How many demat accounts can I open?
A person can hold shares, debentures, bonds, NSC, KVP in a single account but can open more than one demat account if required. Charges can be saved on multiple accounts by consolidating holdings into one account, if there are no other compelling reasons to keep separate accounts.
29. Why should I hold shares in a demat account and is it compulsory for every investor to open a demat account to trade in the stock market?
Holding shares in depository enables immediate transfer of the shares in case of purchases. The stamp duty to be paid on transfer of securities is not needed, all risks associated with physical certificates like fake securities, forgery, bad delivery etc. is not involved. Also, since more than 99% of the settlement at the stock exchanges is taking place in the demat form, it is advisable that securities be held in demat form with any depository participant (DP).
30.What are the advantages of Demat Accounts?
The benefits of Demat account are as follows:
Benefit to the company- The depository system helps in reducing the cost of new issues due to lower printing and distribution costs. It increases the efficiency of the registrars and transfer agents and the secretarial department of a company. It provides better facilities for communication and timely service to shareholders and investors.
Benefit to the investor- The depository system reduces risks involved in holding physical certificates, e.g., loss, theft, mutilation, forgery, etc. It ensures transfer settlements and reduces delay in registration of shares. It ensures faster communication to investors. It helps avoid bad delivery problems due to signature differences, etc. It ensures faster payment on sale of shares. No stamp duty is paid on transfer of shares. It provides more acceptability and liquidity of securities.
Benefits to brokers- It reduces risks of delayed settlement. It ensures greater profit due to the increase in volume of trading. It eliminates chances of forgery or bad delivery. It increases overall trading and profitability. It increases confidence in their investors
31. Can I link Demat & trading accounts?
Yes. You can link your existing Demat account that you hold with another DP / Broker. You can link your Demat & trading accounts with a bank account. You can also link your Demat & trading accounts with your aadhar card and pan cards.
32. Is a demat account required for a mutual fund?
No, you do not need a demat account to buy, sell, and manage your mutual funds. You do need it for stock market investment, but the advancement in technology has removed the compulsion of having a demat account for mutual fund investment including SIP. One can buy and sell any mutual fund scheme directly through an asset management company (AMC), a bank, personal financial advisor, or various third-party portals.
ZERODHA DEMAT ACCOUNT OPENING ADVANTAGES
The term Demat account has been there in India since a long time. Although previously the shares and securities were physically issued and traded. The importance of opening a free Demat account is such that it helps the investors to hold their securities electronically in their respective Demat accounts. The online demat account is best known for the simulation of the entire procedure of investing, holding, monitoring, and trading, faster, convenient, and cost-efficient.
The biggest discount broker available in India is known to be Zerodha which possess over 10+ lakhs of customers. The Zerodha demat account contributes a great deal of all the retail order volumes in India daily by trading and investing in NSE, BSE, MCX, and MCX-SX. The Zerodha account opening charges are nominal and the trading platform provided by it is also very quick and user-friendly.
Here is a list prepared by the team of experts on the advantages of Zerodha demat account opening-
- Risk Free online demat account
The physical securities are a very risky asset to possess due to the threats ascertained from thefts, losses, or damages. To make things worse, bad deliveries or fake securities pose further risks to these physical securities. These outnumbered risks however can be completely eliminated with the Zerodha online account opening which assists the holders with the option of holding all their investments in a non-risky electronic form.
- Reduce Time with Zerodha demat account
In today’s age, the time is very valuable for everything let alone be financial planning. The free demat account opening are simple, fuss-free and extremely lucrative. When the time for hectic paperwork is eliminated, the time required in completing a transaction gets reduced automatically. The reduction in time in turn helps to enable the account holder to make more purchases and sales of security holdings in a rather short time and with great effectiveness and efficiency.
- Online demat account for Share transfers and liquidity
Zerodha demat account helps to transfer all the shares accountable for buying or selling with much more ease. In earlier times, the physical transfer of shares would take about a month or even more. Now as the process is much process simplified, the costs have also come down to minimal. Moreover, there is no stamp duty on transfer of securities held in the electronic form. The Demat Accounts have definitely made it simpler, quicker and more convenient to get money on selling the shares.
- Easy Accessibility of demat account
A free demat account opening online can provide a simulated, quick & easy access to all your investments and statements through online net banking. These details also can be easily accessible through computer, smartphone or any other smart devices and made available to you anywhere you wished. The online Demat account is sure to put all the tedious burdens of physical securities up in the shelves and help you grow through online means.
- Easy dematerialising of demat and trading account
The certificates of investors in physical or online form is always secured to the highest level. She/he only needs to give instructions to the depository participant (DP) to convert it in an electronic form and get access to all the related online benefits. Similarly, the certificates in electronic form can be converted back into physical form on request, if needed. This easy materialising of Zerodha demat account helps to get benefitted from both the possible forms.
- freezing the Zerodha demat account
There are a few specific type or quantity of securities in an online Demat Account that can be frozen by the Demat Account holder easily. You can choose to freeze the Demat Account for a certain period of time due to security or other any other reason. The security is ensured as it will stop the transfer of money of any Debit or Credit Cards into the particular Demat Account immediately.
33. What is a trading account?
Trading account is not much different from a bank account, a trading account works as a common or linking platform to buy and sell securities from the stock exchange, and clearly, securities are purchased through a trading account, and from its name it is also clear that it helps in trading, which means buy and sell.
This trading account helps a trader to execute buy or sell orders. It is easy to set up as well, and most broker companies allow trading through the internet and call trade, in which trading account is mandatory. It enables traders to track changes in tradable stocks, securities or assets on a real-time basis.
The main advantages of trading accounts is to ease the transactions and manage stock portfolios without any help from professional.And it also provides speed up of transactions and makes use of good entry and exit points. Generally for opening a trading account PAN Card and Aadhar Card are considered as most basic and important documents
34. What are Rolling Settlements?
Every order that is executed on the share market must be settled. Buyers receive their shares and sellers receive the sale proceeds. The settlement is the procedure wherein the buyers procure their shares and sellers receive their money.
The rolling settlement is when all trades have to be settled at the end of the day. In other words, the buyer must pay for his purchase and the seller delivers the sold shares in one day on the share market.
Indian share markets adopt the T+2 settlements, which means the transactions are completed on Day One and the settlement of these trades must be completed within two working days from the day the order was executed.
35.Can a Broker misuse the Power of Attorney?
Technically a broker can misuse the Power of Attorney (POA) by selling your demat holding without you placing a sell order.
But the brokers are highly regulated entities. Any such misconduct could result in to very high penalties or even losing the membership of exchange and depository (CDSL/NSDL).Carefully note that In case of a short margin in your trading account, the broker has rights to sell shares from your PoA enabled demat account without informing you in advance. This is part of the PoA agreement.
36. What is the validity of my Power of Attorney for a demat account?
The limited Power of Attorney (PoA) given to the broker is valid until it’s revoked or you close your demat account.
The PoA can be revoked anytime by the customer. When you give Power of Attorney (PoA) of the Demat Account to your broker, you give access to him to make any transaction on your behalf. This is a risky proposition. The PoA is a critical component in online stock trading. It offers convenient hassle free transactions between your trading and demat account.
37. What is an NRO account?
As per the Foreign Exchange Management Act (FEMA) guidelines, it is illegal for NRIs to have savings accounts in their name in India. It is mandatory that you convert all your savings to a Non-Resident rupee (NRE)/Non-Resident Ordinary Rupee (NRO).
An NRO account is a savings or current account held by NRIs in India to manage their income earned in India. Account-holders can deposit and manage their accumulated rupee funds without any hassle. The account allows you to receive funds in Indian or Foreign currency.
You can apply for an NRO account jointly with a resident Indian or even an NRI. It is even feasible to transfer money from your current NRE account. However, the interest you earn in this account is subject to Tax Deducted at Source (TDS).
38. Do I have to keep any minimum balance of securities in my account?
No. There is no such requirement to maintain minimum security balance. You can do transactions with zero balance of security in account. You can Withdraw and deposit money as per your requirement. But brokers will charge some amount ranging from Rs300-800 for your opening Demat account. You can do trading with investment of rs 100-200. Brokers charge Annual maintenance charge for maintaining Demat as well as Trading account up to date. For trading in Futures and options you have to maintain margin with brokers.
39. Do I have to pay yearly maintenance changes even if I do not hold any shares in my demat account?
Yes but it depends on the broker’s rules and regulations. Some brokers are not charging any charges if you don’t have any shares in a Demat account. Maintenance charges are charged for services provided by broker to client in form of advisory made by broker and many more services. But you are not doing any transaction through your account then obviously after one time it gets dormant. For a reactivating Demat account you have to submit documents with a broker as well as clear dues and Reactivating charges.
40. Can I open demat account directly with the depository?
For opening Demat account First we need to approach the Depository Participant. Depository Participant is a link between investor and Depository. A depository participant may be a financial institution, bank, broker, or a custodian acting as an agent of the depository to extend its services to the investors.Each depository participant is assigned a unique identification number known as DP-ID. The details of the Depository Participants are mentioned on the official websites of the depositories.
41. Can anyone open a demat account in the name of joint holders?
Yes, investors can open joint demat accounts. The benefit of opening a joint account is saving in charges levied at various stages by the broker. As well as the first holder will receive all information and updates of each and every trade.Some brokers have a limit of members for joint accounts. Also they have to operate accounts on an offline basis. They are not eligible for online services like placing orders and other services. KYC requirements of all members are needed at the opening stage.
5 TIPS BEFORE OPENING DEMAT ACCOUNT
Introduction to the Online Demat Account
A Demat account is known to provide you with a lot of benefits. Online Demat account is essential to trade on the stock market. It is an account to hold financial securities in electronic form. There are two depository organisations, National Securities Depository Limited and Central Depository Services Limited in India for maintaining the Demat Accounts. There are a lot of registered depository participants in the market which makes it all the very important to select the right one.
Open Demat Account Online
A demat account opening is imperative with a registered Depository Participant (DP).
You can know the advantages you receive on opening a demat account. The updated transaction ease and quality of information is a key to get you on board with the online demat account. Here are listed five must-know points which can assist you to make an informed decision while opening a demat account:
- Determine the Types of Trading Account Online
There are primarily two types of broking firms in demat and trading account category namely discount brokerages and full-service brokers. A discount broker is defined to carry out transactions in equity and derivatives based on the direction of the investor. On the other hand, A full-service broker offers services over and beyond a discount broker and it tag along the additional services such as investing in mutual funds, insurance and IPOs. So it is important to make a choice of the right broking firm with extensive online and off-line presence.
- Support Services for Trade Account opening
It is important to determine a demat account on the basis of real-time information and current happenings on the stock market. A reliable broker at Zerodha demat account provides good support services like analytical and expert opinions on stock recommendations that helps you out with a lot in resolving difficulties and functioning smoothly. This data is surely critical in buying and selling stock at the right time.
- Demat account charges
The Opening of a demat account definitely entails specific charges for vivid Depository Participants. These may vary from firm to firm but they are known to include annual maintenance fees, transaction costs, conversion fees and more. Zerodha account opening charges are thus an important selection criterion as it is crucial to look into these fees before opening an account with a registered DP.
- Technological Support for free demat account opening
One of the irreplaceable factor stands out to be the trading software of your prospective depository participant. Before opening a demat account, it is important to look into User-friendly software that can ensure speedy and smooth transactions. So, if you choose a broker that offers the latest, yet easy-to-understand user interface for effortless investments, you might end up with the perfect deal.
- Online and Offline Demat Account Support
The availability of both online and offline support is important for any transaction to make. Sometimes, it is imperative to receive on-time help from an easily accessible customer support team who can resolve your issues quickly. Under such circumstances, have a good look into the back-end support of the broker before the process of demat account opening.
Sum it up- Demat and trading account Opening
These days stock market trading is one of the most sought-after and elusive options among the people. But to trade or invest in the share market, one requires a demat account. Zerodha annual maintenance charges and Zerodha account opening documents are some of the must-have items in your checklist that you must hover before getting into the share market. So among the plentiful of Depository Participant, you need to do proper research before making your final choice.
42. Is nomination mandatory for demat account?
Yes it is mandatory to assign a responsible person as nominee to Demat account. In case of death of the demat account holder the nominee will get all shares in his demat account. Nominees are legal beneficiaries of shares. So account holders take care while selecting the nominee. As per SEBI’s rules and regulations nomination process is very important when an investor is going to open an account. As well as there is a facility of changing nominees for your demat account.
43. Is a demat account compulsory to apply for an IPO in India?
Yes it is compulsory to have a demat account when we apply for IPO. While investors make an application for IPO they have mentioned all details like demat account and all other things. Because shares are allotted then it will deliver in mentioned demat account details. After allotment it is directly delivered in demat account. So a demat account is the first and foremost thing which is required in the whole process.
44. What is “standing instruction” in a demat account opening form?
There is a “receipt in” form when we go through the process, that you need to submit along with the depository opening form. When you buy any stock your broker needs to credit your demat account with that number of shares within the stipulated time frame. Every time you buy a new security, you need to do this process of filling “receipt in” form. So, to make the process easier there is a “standing instruction” as well. If you tick yes for the standing instruction heading in the demat account opening form then you need not have to fill this “receipt in” form every time you make a purchase
45. Do I require demat account for SIP?
There is no such instruction for having demat accounts while investing in Systematic investment plans. Investors need not have demat accounts for investing in mutual funds. If you want to invest in SIP simply visit the website if you have a particular fund. Select a plan in which you are interested. And follow the instruction to move further. Nowadays to invest in funds is very user friendly. Asset Management companies provide those services as well their call centre representatives are there to help at every stage.
46. Is it mandatory to have a demat account to apply in IPO?
Yes it’s mandatory to have a demat account to apply in an IPO. IPO Allocated shares are transferred to investors demat account. If you don’t provide correct demat account information your IPO bidding application will not consider for share allotment.
Always double check that you provided correct DP ID and Client ID details in the bid/application forms before submitting the form.
The Securities and Exchange Board of India (Sebi) has estimated that Indian issuers spend more than 2 percent of the targeted IPO subscription on issue costs. In contrast, international issuers spend less than one per cent on issue costs.
47. How do I transfer from one demat account to another demat account?
These are the steps that need to be followed:
Step 1 – Once the CDSL website has been accessed, the ‘Register Online’ link has to be selected.
Step 2 – The next step is to fill in the form with the required details.
Step 3 – Once the form has been filled in, the option to ‘Print Form’ has to be selected. After the form has been printed, it will be transferred to the account holder’s DP.
Step 4 – After the DP has finished the verification process of the form, a password will be sent to the account holder’s email id.
Step 5 – Using the provided password, the account holder can log in and begin transferring the required shares.
48. How much interest do I get on a demat account?
Demat account is for holding Dematerialized securities (Shares, Unit of Mutual funds etc). It does not have any amount in it. Hence the interest factor is not the decider for any demat account..
In the Bank we use a bank account for depositing our savings or investments whereas a demat account is used for holding our securities in electronic format.
If you want to invest, sell or transfer your shares or mutual funds units online, a demat account is a must. you are not depositing any amount in the demat account. your holdings or your total investments in various securities like shares, investments and debt instruments are reflected in your demat account.
49. What are the maintenance charges for demat account?
The Annual Maintenance Charge is now renamed to Account Maintenance Charge and an Account Maintenance Charge (AMC) is the cost to maintain your demat account and thus, it is applicable only for the demat account maintained with us, i.e your trading account and commodity account will not have a maintenance charge.
The AMC is directly charged from your trading account balance once in a quarter.
Note: AMC is charged per quarter (at applicable AMC charges divided by 4) i.e. every three months starting from the date of account opening.
50. Is there a nomination facility in demat account?
Yes, just like any bank, every stock brokerage gives the option to their customer that they can nominate a person for beneficiary if the account in the case of the account holder dies.
NSDL to allow up to three nominations in a single demat account. Country’s largest depository NSDL will soon allow demat account holders to nominate up to three persons for their holdings in a single account.
At any point of time, if demat holders wish to change their nominee, all they have to do is submit a duly filled in nomination form to the Depository Participant, with their fresh nomination specified on it.
Top 10 Tips for Beginners to earn Big money in Stock Market
Starting to invest in the stock market can be overwhelming. The excitement of making big money in a short period of time lures many into it. There are many stories of rags to riches on the internet of the people who made it big by investing in the companies that shot to success overnight. But it’s not as easy as it sounds. A favorable outcome is not the result of sheer luck, but the result of certain principles, experience, and of course, perseverance.
Tips for beginners before they start investing in the stock market
- Understand the basics
Before you set out on your endeavor of investing in the stock market, it becomes quintessential that you take the time and effort to learn the important basics of the stock market. The decision of investing in a company one fine day might fetch you the desired result out of sheer luck, but it will not work all the time. The decision to buy and sell stocks should be well-informed ones, based on strategy, observation, and knowledge.
- Financial Definitions and Metrics
Understand different metrics such as P/E ratio, Earning Per Share(EPS), Compound Annual Growth Rate (CAGR), Return on Equity (ROE), etc. Understand how they are calculated, know they are important before you decide to open demat account online.
- Methods of Stock Selection
Learn how various analyses such as fundamental and technical analyses are performed, how they are different from each other, and which strategy is best suited when.
- Stock Market Order Types
Learn the difference between market orders, limit order, stop market orders, stop-limit orders, trailing stop-loss orders, and other types commonly used by investors
- Types of Investment Accounts
While cash accounts are the most common, margin accounts are required by regulations for certain kinds of trades. You should understand how margin is calculated and the difference between initial and maintenance margin requirements.
- Decide when to invest
You want to make big money, and you want to make it as soon as possible. But how do you decide if it is the right time for you to invest in the stock market? First of all, you need to understand that the money that you have invested might not be available to you if you happen to need it immediately. It is advised by the experts that you have a minimum of 6 months’ worth of living expenses in your emergency account, more in case you have a family to support before you start investing. Start saving at an initial stage, save a lot before demat account opening.
- Diversify Your Investments
Investors are always looking to improve their returns while reducing the risk. While the elimination of the risk might not be entirely possible, you can still try to reduce the probability of your exposure to risk and at the same time, grow your wealth. As per Investopedia “Diversification is a risk management strategy that mixes a wide variety of investments within a portfolio”. It helps in limiting your exposure to a huge risk. Investing in securities that have low or zero correlation to your portfolio helps in making sure that the performance of one security doesn’t have a major impact on your other securities. Learning diversification at an earlier stage proves crucial for initial investors.
- Don’t make decisions based on emotions
Selling the stocks of an established company when the stocks are plummeting down due to situations like the ongoing pandemic is not a well-informed decision, but one based on emotion. Panicking helps no cause.
Stock markets are volatile in nature. So it’s important that instead of panic-buying or panic selling, you analyze the trends. Fundamentally strong companies survive such crises and start bouncing back. What you need is to plan your investment in such a way that these crises affect you the least, if at all.
- Avoid Leverage
As a beginner, you must avoid leverage as much as possible. What is leverage, you ask? Well, leverage is the tool or strategy where you borrow money for the purpose of investing. This money is lent by brokerage firms. You need to pay the principal amount along with the interest when you sell off the shares.
Suppose you bought a share for $100, and you borrowed $50 from a brokerage firm to buy it. It sounds lucrative and you might think that you get the profit and only need to pay the principal amount with interest when you sell a share at $200. However, if you need to sell the same share at $50, then the situation is lost for you.
At the beginning level, minimizing the risk should be the target for you. Once you have enough experience and a niche skill in trading, then you might consider the strategy of leveraging for your advantage.
- Understand your investor profile
Every investor is different and has different financial needs and goals. Before you start investing, you should first evaluate the below
- Set Goals
Are you investing for the college fee of your kids? Or you want good returns so that you can buy a house? You need to decide your goals and invest accordingly. These goals play a major role in deciding the risk that you are willing and should take.
- Understand Risk Tolerance
According to Investopedia “Risk tolerance is the degree of variability in investment returns that an investor is willing to withstand in their financial planning”. Understanding the risk involved and your tolerance level becomes crucial for successful investing. Every person has a different risk tolerance. There are various risks involved, viz. Market risk, liquidity risk, inflation risk, concentration risk, etc. It’s important that you understand the meaning and implications of these risks. Higher risk leads to higher returns and vice versa, this is an unsaid rule in investing, however, this might not always hold true.
- Tenure of your investment
It is generally advised to invest for a period of 7-10 years. But then again, it depends upon your financial goals and these goals depend upon your requirement. So it’s important for you to make a blueprint of the amount that you can invest, and for how long you can keep it invested. You should be well aware that the amount you have invested might not be immediately available to you in case you need it. If you plan to invest for the immediate future, then you should consider another investment.
These points help you draw your investment portfolio, and most importantly, help you create an investment plan suitable for your requirement.
- Analyze market trends
New investors tend to blindly follow market trends and experts giving advice about buying and selling the shares. While their advice does make sense, it is important that you do not follow market trends blindly and start panic buying or panic selling your shares when the market surges or drops respectively.
- Avoid speculations
In order to become a truly successful investor, do not speculate. Analyze the company profile over the last few years, go over the financials of the company, and make data-driven decisions. Many investors buy stocks at a low price and sell them at a higher price. This helps them ensure a profit and saves them the trouble of going through the company profile. While this might work in a few cases, this cannot be adopted as a long term strategy.
- Expect realistic returns
Don’t believe that you’ll be rich overnight after you create your online demat account. The rags to riches stories all over the internet might be true but it is not necessary that it will happen with you. People have invested in companies that turned huge overnight, but you cannot credit this success to sheer luck. It involved research of the company, it’s product/ services, and its relevance in the current market scenario.
Typically, you can expect a return of over 15-20% over the long term. This also depends on the company and the market scenario.
- Keep Updated
It is important that you monitor the money that you have invested. Keeping a tab on the current market scenarios, the upcoming technology, world affairs, global and national events that might impact your share prices is an important strategy. Keeping up to date with the latest information about things that can impact your investments is highly advised.
Investing in the stock market is a lucrative option for making quick money. But it’s a misconception that is still prevailing across the world. Investing in the stock market requires patience and understanding of the market and its intricacies. Rather than luck, people are successful when they make data-driven decisions. So before demat account opening, it becomes very important that you learn the basics of it.