Things to Check Before opening A Demat Account
Stock market trading is one of the most sought-after yet elusive options among people. It provides better returns than most investments and has helped many people to accumulate wealth over a period of time.
But to trade or invest in the share market, one requires a demat account. Unlike earlier, when shares were held in the form of physical certificates, they are now stored in a dematerialized, electronic form.
This makes it mandatory for you to have a demat account before you start dealing in shares. However, before opening a demat account, it is important that you check off the following list in order to do it right. Let us first understand what a demat account is before going through the things that you would need to open one.
What is a Demat Account?
It is an electronic account opened with a Depository Participant (DP) associated with either the NSDL (National Securities Depository Ltd.) or the CDSL (Central Depository Services Ltd) to store your shares in a dematerialized form.
A demat account holds the shares you buy from the markets until you sell them.
Checklist for opening a Demat Account
If you are looking to open a demat account, here are a few things you need to have in place:
Verify broker's credentials: Before you open your demat account, it is very important that you verify whether the broker you are opening your account with is credible. Make sure that the broker/DP is registered with SEBI (Securities & Exchange Board of India). If the broker is SEBI-registered, it becomes easier to complain in case of any fraudulent activity or litigation.
Enquire for depository services: You need to inquire if your broker is a DP and provides depository services. It is an added advantage if they do, because:
- It makes the transactions smooth and hassle-free
- Your broker can assist in demat-related issues
- Improves transparency and makes processes quicker
Enquire about brokerage and other charges: Before opening a demat account, it is very important that you inquire about the different charges that your broker levies on their services. Some charges that brokers levy include conversion fee, annual maintenance charges, and transaction fees. Also, make sure that there are no hidden charges that they would levy in the future.
Look for a good trading platform: It is important to have a good trading platform with the following features:
- Real-time prices
- Bid and ask price
- Buy and sell history
- Financial data for analysis
- Current portfolio details
- Recommended stocks with their details
Enquire about support services: Apart from the above, it is also important to know about the support services that he/she will provide. Having a reliable broker that provides good support services helps out a lot in resolving difficulties and functioning smoothly.
Enquire about research and analytics: Along with the above services and features, research and analysis play an important role in earning better returns. A broker which provides good research and analysis material in the forms of different reports, analytics, and technical data is really helpful to you scoring better profits by making better trades and investments.
Once you tick off everything in the above checklist, you will be able to ensure that the broker you are going to open your demat account with is worth it and would be helpful in many ways for your trading and investment activities.
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