Here is what you should know before opening a Demat Account

Demat Account

Investing in Equities has become simpler with Demat Accounts. You can hold financial securities in a digital form, unlike in olden times when copies were stored physically. Just like a bank is the custodian of money, a Demat Account works as a custodian of securities. However, an investor should do thorough research before choosing a depository participant. 

The Demat Account opening requires some prerequisites. Let us focus on them one by one.

1.Broker types

You need to select a broker through whom you will conduct your transactions to purchase and sell shares. There are usually two types of brokers. The discount brokerage firm carries out transactions in Equities and Derivatives based on your decisions. The full-service broker provides extra services like Mutual Funds and Initial Public Offerings. 

2. Technology used

With robust technological advancements, processes are becoming hassle-free. When choosing a depository participant, you should ensure that the technology platform is seamless. Pick a broker that offers the newest yet simple-to-use interface for easy investing.

3. Charges involved

While choosing a depository participant, it is essential to ascertain the fees involved. Often, the brokers advertise about free Demat Account opening. However, it is only one of the costs of maintaining the account. The annual maintenance charge, which is levied on you annually, is the other associated fee. Typically, this depends on the shares held in custody value. 

Other charges include the costs that the depository participant pays while you sell the shares. Additionally, there are charges if you ask for a physical statement, duplicate statement, or statement of holdings/transactions for proof purposes. You need to consider the entire fee structure before choosing a broker.

4. Support services

Not everyone is tech-savvy and is bound to make mistakes while making transactions. It can happen with anyone as technology keeps changing. Therefore, before choosing a broker, you should ensure that your back end is strong enough to handle the queries. 

5. Nominations

Finally, identifying a nominee is crucial when opening a Demat Account. It helps in the smooth transitioning of your securities in case of your demise. Consider the financial objectives you have established for your family carefully. The person you choose to lead your investments should be aware of, in tune with, and mindful of these objectives.

Conclusion

An investor should be diligent enough to research every broker’s opening process. Proper knowledge helps in a hassle-free trading experience, and you do not face any unnecessary hassles. 

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