A demat account allows you to invest in various financial instruments and hold them in electronic form. Opening it is essential to invest in stocks, mutual funds, corporate bonds, government securities, ETFs (Exchange Traded Funds), and many other securities. The demat accounts are managed by NSDL and CDSL which are the two main depositories of the Indian stock market. DPs (Depository Participants) manages the communication between the depositories and investors and facilitate a smooth trading process.
How to choose the best demat account in India?
The demat services are offered by the DPs and in exchange, they charge brokerage and other demat charges. Therefore, the choice of a demat account can determine your trading profit. You must be careful about these things while opening a demat account:
Ease of opening demat account
Know the account opening procedure that DPs provide to their customers. A DP can be a bank, stockbroker, or trading platform registered with the central depositories.
It would be convenient if the DP offers an online process for the same. Also, you can check the customer reviews on reliable websites to check whether a DP offers a convenient account opening process or not.
Demat account charges
Account opening charges are waived off by most DPs these days. However, not every DP provides a free demat account opening facility to their customers. Therefore, investigate the account opening charges along with the demat account charges such as annual maintenance fees, custodian charges, etc.
You can also inquire about the fees charged by the DP for dematerialisation and rematerialisation of securities.
Compare brokerage fees
Along with demat account charges, you must also compare the brokerage charged by different DPs to get an appropriate deal as per your trading requirements. These days, brokers usually don’t charge for delivery trades and offer a flat rate system for intraday trading.
You must also check whether the broker provides MTF (Margin Trading Facility). With MTF, you can borrow the funds required to buy securities after paying a fraction of the total transaction value. Moreover, you must check the MTF interest rate offered by the broker as a reasonable interest rate would save you from repaying a huge amount in return.
Learning resources & trading tools
After opening a best demat account, you should expect to get proper guidance from the broker. Market insights and learning resources are essential to make an informed decision, especially if you are a beginner. Therefore, you must find a broker who provides adequate learning resources. You may also need some research and trading tools to evaluate a stock in real time.
For instance, the option of creating equity baskets for dividend and growth-based stocks, access to market trends, an SIP calculator, and other trading and research tools can make a huge difference in your overall trading experience. Therefore, a broker who provides these resources and tools can be the ideal pick for you.
Tips to make the selection process easier
You can follow these tips while selecting the best demat account for trading:
- Ensure that the DP offers a quick trading platform that helps to execute trades in real time. Also, the platform must be reliable enough to avoid any inconsistencies in the future.
- Check what the customers have to say about a particular DP regarding their services. It will give you insights into their quality of services.
- Ensure that the DP does not have any complaints or issues with the regulators that are pending for a long time.
- It would be better if you get a mobile app for trading and monitoring your holdings without any hassles.
- The DP must provide a seamless interface that allows you to connect your trading and bank accounts with your demat account. These days, DPs provide a 3-in-1 account that comes with all three accounts under one roof. Having such a unified trading platform helps you to carry out transactions smoothly.
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