5 Things to Know to Open Demat Account Online in India
The shift from offline share trading to online share trading lets investors and traders invest in the stock market through online means. You can interact with the markets using just your phones and laptops. This online share trading process is very quick and simple compared to offline share trading. You need to open a Demat account and a trading account to start trading online.
A Demat account is similar to a savings account you open with your bank. The savings account stores your cash. It allows you to deposit cash and withdraw cash when you need it. Similarly, a Demat account stores your shares and any other financial asset you digitally purchase in the stock market.
When you buy shares, they get stored in your Demat account, and when you sell shares, they get credited out from your Demat account. However, to buy and sell shares, you need another account called a trading account to buy and sell shares to buy and sell shares. You will also need to link your bank account with these accounts to transfer funds to buy and sell shares online.
Online share trading is not possible without a Demat account and a trading account. If you are above 18 years, you are eligible to open a Demat account. You open your Demat account with a SEBI registered depository participant or stockbroker like Kotak Securities. Your broker acts as an intermediary that connects and lets you trade on the exchanges. You should open a Demat account online by visiting the broker’s website.
However, you need to know a few things before beginning the Demat account opening process. The following are five important things you must know before getting started.
Type of Stockbrokers
In India, there exist two types of stockbrokers – full-service brokers and discount brokers. A full-service broker provides advisory services and stock portfolio management services. They will guide you and help you decide which investment or trading style suits you the best.
They provide you with in-depth research reports of different companies prepared by experienced professionals and analysts. You also receive daily online share trading tips and recommendations. A full-service broker will set you up with a relationship manager who will attend and answer all of your queries. In contrast, a discount broker only provides Demat and trading services. They act solely as an intermediary between investors and the exchanges.
Account Opening Process
Opening a Demat account online should be very simple and easy to follow. One should be able to open a Demat account using mobile phones. According to SEBI’s guidelines, opening a Demat account entails certain documents to prove your identity, citizenship and address. You also require a PAN card since it is mandatory to open a Demat account. You also have to submit your photograph and your signature. However, your broker should let you complete the verification process online using digital documents. Kotak Securities has a fully online account opening and verification process. You can open a free Demat account by going to the Kotak securities website or downloading the Kotak securities trading app. You also need to ensure your stockbroker provides Demat account services and trading account services.
Account Fees and Brokerage Fees
Stockbrokers charge a fee to open an account with them. They also charge an account maintenance fee annually. Stockbrokers charge a certain fee to execute every transaction, called a brokerage fee. The account opening, annual, maintenance, and brokerage fees differ from broker to broker. Apart from the brokerage fees, other charges and taxes like the exchange fee and the STT or securities transaction tax. Kotak Securities lets you open a Demat account for free and charges zero brokerage on intraday trades in the equity segment.
Products Offered by the Broker
You should offer a note of the services of stockbrokers. There are different segments like equity, derivatives, currency, commodity, bonds and mutual funds. Most of the broking services let you invest in most of these segments.
Trading Platform Features
You also need to ensure that the trading platform is well optimised, has a user-friendly interface and has all the essential features. It may not be possible to test the trading platform before opening your Demat account. However, you should research a few things about the platform. Ensure that the trading platforms give you access to the price charts of various assets.
Since these charts help you analyse shares and other assets, online share trading mandates technical analysis—lookup for platform images to get an idea of its user interface. The interface should not look cluttered such that it is indiscernible. Having features like live market updates is a bonus.
These are five things to keep in mind before opening a Demat account. You can learn and widen your understanding of technical analysis fundamental analysis later on in your investing journey. However, you need to get the first step right by choosing the correct Demat account.