In India, till only a few years back, investing in the stock market was restricted to only a minuscule percentage of the population. The volatility in the stock markets was a significant deterrent for many players to enter this field. The general perception of assuming these trades to be a gamble was a prevailing misconception.
Things changed drastically with the advent of modern technology. Digitalization enabled the new tech-savvy generation to adapt to the financial markets quickly. Online stock broker mushroomed due to this new interest amongst the millennials.
The booming era of online trading:
In FY 2020, an average of four lakh demat accounts were opened by Indians every month. By 2021 this figure jumped to an impressive twenty lakh per month. In fact, in November 2021 alone, twenty-nine lakh new accounts were opened by Indians.
As the new India is gearing up to get the maximum benefits from the financial markets, let us check these five things before opening a Demat account with a broker.
- Open your Demat and trading account with the same broker:
A Demat account is where the assets purchased and owned by the investor are stored. A trading account allows users to buy and sell financial instruments. Since these activities correlate with each other, it is advisable that for ease of operations, one should maintain the Demat and trading account with the same broker.
Although regulations permit users to open a Demat account and trading account with different brokers, it makes more sense to have them with the same broker.
- Understand associated charges:
Most brokers provide benefits by letting you open a Demat account for free. However, there are certain underlying charges associated with a Demat account. The user needs to be fully aware of these charges as they differ from broker to broker.
Generally, there are charges for every trade executed. Apart from this, the user also pays an annual maintenance charge. Some brokers may also charge a flat transaction fee for the trades executed. So, as per the user’s requirement, one must compare charges and select the broker which is more suitable for one’s transactions.
- Choose a platform suitable for your trading requirements:
The entire operations of the stock market have shifted to the digital sphere. Investors and traders can now execute their orders with just the click of a button. Platforms available for trading are web-based; desktop and mobile apps are easily accessible. A consumer must critically assess the platforms offered by various brokers and try to select the one which offers simplicity, is fast, stable and relatively bug-free.
- A platform that provides impeccable customer support:
Due to the online trading facilities now prevalent in the financial markets, most investors choose to execute the orders independently. There are times when certain discrepancies could arise due to this self-trading. Hence, selecting a broker with a strong customer support team is imperative to address and resolve such issues.
- Adequate broker review:
In the market now, there are discount brokers and full-service brokers.
Discount brokers carry out the instructions given by the customer and provide the platforms for executing the trades.
Full-service brokers provide a seamless experience and also recommend investment opportunities. Some also provide PMS and advisory services coupled with their regular features.
Before selecting your broker, it is vital that you thoroughly research the reviews for the broker and try to select the one that provides the best user-friendly services.
Whether you would like to invest in stocks, derivatives, ETFs, bonds or debentures, having a Demat account is essential. You can’t participate in financial markets until you open a Demat account. The above checklist would help you select the correct broker to embark on your financial investment journey.
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