How to Choose Best Demat Account for Trading?

The stock market is the pulse of the economy. Economy is said to be booming if more people join it by investing in the stock markets than having their money stagnate in bank deposits.

A Demat is needed for any individual who wishes to trade/invest in the stock markets. You can build your financial assets of equity, mutual funds, bonds, IPOs, debentures, gold etc with ease with the super-flexible demat account.

Selecting a reliable demat account starts with the selection of a broker. There are primarily 4 types of Demat account which are explained below:

Single Holder Demat Account: The demat account is owned by one person. Anyone can open this account and start trading. The risk and reward both belong to the owner.

Joint Demat Account: As the name suggests this account can be jointly opened by upto 3 people. The account can be operated jointly by these 3 people and similar sharing in profits or losses.

Corporate Demat Account: A company or any commercial business can open this type of account. The profits are credited to the company’s official bank account. The account is operated under the name of the organization.

NRI Demat Account: This type of account is meant for Non-Resident Indians. There are 2 types of NRI Demat accounts, Repatriable and Non-repatriable. The only difference being the ability to transfer fund abroad.

Once you select the type of account, the process of opening the account should be extremely simple.

The best demat accounts offer e-kyc and paperless account opening process. If the documents are ready; the registration process should not take more than 10 minutes. The process is simple because entire validation is done using Aadhar data with identification or in-person verification done through a camera.

SEBI mandates that a BSDA or Basic Services Demat Account be offered which provides most services at reduced costs to retail traders. These accounts have online demat facility and are commonly known as no-frills or basic demat accounts. This type of account is a great option for a new investor.

Demat Account Charges

The next important thing one should look for are charges applicable. An investor should look for below benefits:

  1. Free* Demat Account Opening
  2. No AMC for the first year
  3. No minimum deposit required to open an account
  4. Low Brokerage Charges

Because there are charges applicable for opening and maintaining the account the brokerage firm will most likely take some minimal charges next year onwards.

Interaction Between Banking and Broking

An ideal demat account should function seamlessly between the bank and the demat account. Look for the below functions in the demat account,

  • Investor can seamlessly transfer money between savings account and demat account
  • Investor can easily trade in securities with this unique id
  • Share credits are reflected in the demat account

Business Analytics

There are many transactions that a trader or investor does over a period of time. The demat account should give all types of reports that a trader would like to see. A back-office reports panel with customized reports is ideal.

“A secure demat account with trusted depository participants”

Trading platform

Trading today happen on-the-go. It is also best to look for a broker who provides a great trading platform with real-time updates and advanced charting options.

The above details and tips are to be kept in mind while selecting a demat account.

Happy Investing!

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