The current online account opening method has made opening a Demat account extremely straightforward. You don’t even need to go to the broker’s office to open an account under the existing system. You can start a Demat account within an hour by simply filling out the electronic form, updating your mobile number and email address, and completing KYC compliance with a preferred DP.
There are certainly plenty of other questions on your mind, such as how to register a Demat account and what fees and conditions apply when utilizing your online trading account. If you want to open a Demat account, you should be aware of the following points:
- Why have a Demat account
- Different types of Demat accounts
- The Application Process
- Choosing a broker
- The right trading platform
Now let discuss these in detail:
1) Why Have A Demat Account?
Demat is an abbreviation for dematerialization, and these accounts have been around for more than 20 years, gaining in popularity with each passing year, and now totaling more than 40 million accounts.
Investors’ tastes have evolved, resulting in a shift away from more traditional investment goods and opportunities like real estate and gold and toward mutual funds, shares, and even more complicated strategies including commodities and derivatives.
A Demat account gives you access to an electronic system where you can store stocks, derivatives, and exchange-traded funds (ETFs).
Your Demat account can be thought of as a more sophisticated form of a savings account.
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2) Different Types of Demat Accounts
When it comes to Demat accounts, Indian investors have three options. A normal Demat account, which is available to Indian investors, is the most popular alternative.
If you are a non-resident Indian national, you can open a repatriable Demat account, but you must link it to an NRE (Non-Resident External) bank account.
Finally, non-resident Indians can open a non-repatriable Demat account, which must be linked to an NRO (Non-Resident Ordinary) bank account. This sort of Demat account, however, cannot be used to move funds outside of India.
3) The Application Process
As you might think, you’ll need to furnish several documents to start a Demat account. Regardless of whether firm or organization you choose to apply to for a Demat account, the documentation requirements are largely uniform and essential.
You’ll need to show proof of identity, such as a PAN card with a current photograph or information from your identity card.
Also necessary is proof of address, which can be verified using bank records, utility bills, or a government document that meets the standards.
Proof of income will be required, which can be submitted in the form of an income tax return or a certified accountant’s statement of net worth.
You’ll also need to show proof of your bank account as well as several passport-sized photos. It should be mentioned that when applying for a Demat account, you will be required to give PAN card information as well as a valid photograph.
4) Choosing A Broker
While it comes to your Demat account, the broker you choose is quite significant, and there are various factors to consider when making your decision.
In India, you can choose between two types of brokers: discount brokers and full-service brokers. A cheap broker will supply you with the essentials and will simply carry out your orders while also providing you with equities and derivatives trading services.
A full-service broker, on the other hand, will provide a considerably broader choice of options and support services, such as portfolio and management advisory services. The type of support and guidance you require, as well as your degree of sophistication and requirements as an investor, may influence your choice of broker.
You should also compare the pricing structures given by the various brokers in India, as they tend to differ substantially. You should find that to compete for your business, most brokers offer free Demat accounts but charge brokerage fees when you buy and sell stocks or use other services and options.
5) The Right Trading Platform
Last but not least, having access to the appropriate trading platform is critical, particularly if you intend to engage in intraday trading.
In an ideal world, you’d have access to a variety of trading platforms so that you may execute trades and check data as rapidly as feasible.
What You Will Prefer: Website or App?
Visit the websites of the brokerages you’re considering if you plan on performing a lot of your research or trading online. The site’s appearance and usability will be almost as significant as the other perks and services it provides.
During instances of strong market volatility or trade, some brokerage houses have a history of site outages. Others direct brokerage account holders through a maze of recorded messages before speaking with a live person.
If you prefer to use an app, make sure the trading app is compatible with your device and is easy to use.
When it comes to opening a Demat account, if you cover all of these essentials, you should be ready to join the millions of investors who are already reaping the benefits of broadening their investment horizons.
