You cannot start trading as soon as you decide. You must open a brokerage and a Demat account first to start trading. These accounts allow investors to purchase, sell, and hold financial securities. New investors often get confused while choosing a Demat account provider in India. Read on to learn some tips to select the best Demat account in India.
Why Dematerialisation Accounts Exist?
Before discussing the tips, it is essential to understand how dematerialisation accounts work. A Demat or dematerialisation account is used to hold securities in India. Financial securities stored in Demat accounts are digitised or dematerialised. It means they have been converted from physical to electronic format. When you hold electronic securities in a Demat account, there is no need for physical trade certificates. Paper-based trade certificates issued by stock exchanges were popular before the introduction of Demat accounts in India. Since the concept of dematerialisation was launched in 1996, very few investors depend on physical certificates.
A Demat account can hold a variety of assets, like equities, derivatives, mutual fund units, and bonds. You can build a diverse portfolio by holding a wide range of securities in a Demat account. Not to forget, you can also track your holdings anytime with a Demat account. However, a dematerialisation account will facilitate the trade of securities, as it only holds them. It is where a brokerage or trading account comes into the picture. Brokerage accounts offer access to financial markets where investors can place purchase or sale orders. Both Demat and trading accounts work in collaboration to facilitate online trading.
Comparing Demat Accounts to Choose the Best One
Choosing the best Demat account might be challenging, as many service providers exist. Here are some tips to compare Demat account providers and choose the best option:
Consider the Complexity of the Account Opening Process
You must compare Demat account providers based on the complexity of their application process. Avoid stockbrokers or depository participants that do not allow applicants to apply online. Similarly, choosing a service provider with a long waiting period for a new Demat account might not be efficient. New investors must choose a full-service or discount brokerage firm that accepts Demat account applications online.
Check for Availability of Trading and Demat Accounts
As discussed above, both brokerage and Demat accounts are essential for trading. Every investor must link their brokerage account with the Demat account for faster trade settlements. While browsing Demat account providers, choose a broker that helps open both trading and Demat accounts. Some brokers offer a 2-in-1 feature, where both Demat and trading accounts are linked in advance.
Transfer of Securities
You might know how to transfer shares from one Demat to another. However, check whether the broker or depository participant facilitates the transfer of shares. Also, check for the time required to transfer shares from one Demat account to another. Considering these things will allow investors to choose the best Demat account in India.
Compare Demat Account Charges
Comparing Demat account charges of different brokers or depository participants is more than important. Service providers apply maintenance, transaction, dematerialisation, custodian, and other charges. Choose a provider with minimal charges to generate maximum returns on your investments.
Consider the UI
Stockbrokers usually offer trading apps or web-based portals to access Demat and trading accounts. Consider the user interface of the trading application or platform. When the UI of a trading platform is intuitive, new investors learn the tricks of trading faster.
In a Nutshell
You must consider several factors to pick the best Demat account in India. Account charges, user interface, and security are a few factors to consider when choosing the best Demat account provider. Opening brokerage and dematerialisation accounts with the same broker in India is better. Apply for a dematerialisation account now!