Facts & Facets to Learn before Opening a Demat Account

Investing in the stock market seems to be a lucrative opportunity for prospective stockholders. The inception of modern trading platforms has given investors a scope to get their hands on specific tools and platforms. This is where the discussion of opening the Demat (or dematerialization) account becomes immensely significant.

Why Is Creating a Demat Account So Significant?

The online demat account opening has become an indispensable element of trading in the modern financial market. Nonetheless, a newcomer might not understand the concept of opening the demat account entirely until he/she decides to invest. Therefore, this post answers queries related to opening the demat account and undergoes a step-by-step procedure.

Major Components to Take Into Consideration When Opening an Account

Before diving into the significant elements of opening the demat account, you should understand what is demat account first. The purpose of a demat account is similar to that of a savings account. Simply put, a demat account is an account that holds the traded securities. Besides, it can be accessed wherever or whenever you require transferring or transacting for trades.

To open a demat account, you would require approaching a trustworthy SEBI-registered broker who can guide you through the opening process. As the process is seamless and straightforward, you only have to submit some documents through the e-KYC and meet minimum eligibility criteria. Be aware of a couple of factors before you open the account. To give you an idea of what it looks like, here are some factors to consider before opening a demat account.

  • Checking the Brokerage Type
    Before you look for a trustworthy demat broker, remember that there are 2 significant types concerning brokerage firms– (1) full-service and (2) discount brokers.

    A full-service broker offers smooth investment and trading opportunities, while a discount broker carries out instructions and offers derivative and equity services for trading.
  • Brokerage Charges and Fees
    Brokerage charges and fees for creating the account will vary from one broker to another. Even though some brokers offer free accounts, most of them charge a transaction fee when you sell or buy equities.

    Besides, you need to look for annual maintenance charges as well as transaction fees. Not to forget, transaction charges can vary greatly among the brokers, so always keep an eye on the offers.
  • Choosing a Trading Platform
    Opting for a reliable trading platform is prerequisite, especially for intraday trading. This makes it evident to be very particular about your selection of the broker with the right platform. With the emerging prominence of web-based, mobile, and desktop trading apps, choosing a simplified and efficient trading platform is no longer cumbersome.

    What you can do is carry forward a set of research ideas to check for the authenticity of the platform used by your selected broker. Always ensure choosing a bug-free, reliable, and stable platform.
  • Specific Documents Required
    Like other financial accounts, opening a demat account would require submitting a couple of documents. On that note, never miss out carrying your PAN card, as it’s a mandate document.

    Besides your pan card, you require an identity proof and address proof (like Passport or Aadhaar card). Also, you might require your driving license or ration card as your address proof.

Step-by-Step Method to Open a Demat Account

  • Choose a depository participant only by reviewing specific factors like ease of account opening, trading resources, and robust trading platforms.
  • Go to the official website and search for ‘open a Demat account’.
  • You will be directed to fill the form for opening the online account.
  • Upload scanned copies of prerequisite documents.
  • Upon submitting the required documents, the application gets processed by your DP. You might receive the information concerning the new account on your contact details as provided.

Final Words

Venturing ahead in the world of trading is not easy for newcomers. This post was designed to guide you to proceed more smoothly. Always remember that a significant way to start on your right foot is by selecting a trustworthy depository participant