5 things to check while opening a Demat account
Until 1996, investors held their securities in paper form, which was prone to damages and theft. With the advent of technology and the rise in online trading, demat accounts became prevalent among investors, making it efficient for them to store their securities securely in electronic format. Before we jump into the essential factors to consider when opening a demat account, let’s quickly understand some basic concepts.
What is a Demat account?
A dematerialised or demat account holds various types of investments, such as stocks, government securities, exchange-traded funds (ETFs), bonds, and mutual funds in a single place.
It reduces the risks of theft, damage, and malpractices, and facilitates trading as it stores your securities in an electronic format. Like a bank account, a demat account is either credited or debited each time you buy or sell shares.
However, there are a few things you need to be aware about before opening a demat account to have a smooth investing journey.
Factors to consider when opening a Demat account
Trading And Demat Account With The Same Broker
Technically speaking, you can have your trading and demat accounts with different brokers. However, it is advisable to have both accounts with a single broker. This will help you ensure smooth investing without hassles. Moreover, if a broker loses their trading license, it can be detrimental to your investments.
Brokerage And Other Charges
Several brokers offer opening demat accounts for free. However, you might have to pay annual maintenance charges (AMC) even if you are not an active trader. Additionally, you may need to pay a brokerage fee for every trade, be it buy or sell. Therefore, beware of these charges before opening your demat account with any broker.
Range Of Online Services
With most brokers shifting to online platforms, what differentiates them is the range of services they provide to the user. Leading brokers now educate their customers about stock fundamentals, provide market insights, and other free value-added services to help you make efficient decisions.
Support Services
Choose a broker that offers you high-quality support services. Check how efficiently they deal with issues like a pledge, customer complaints, etc. Moreover, their customer service professionals must be skilled and well-trained to handle queries related to your portfolio or technical issues.
User Reviews
It is advisable to skim through online customer reviews to know more about the broker’s track record before opening a demat account. Also ensure that there are no regulatory investigations going on against the broker.
Procedure for opening a Demat account with m.Stock
After you’ve decided on a broker, you need to fill in the Client Registration Form along with the prescribed details and documents mandated by SEBI.
Also, you need to submit the account opening form and the know your client KYC documents.
As soon as the documents are submitted and verified, you will receive your account details along with a Unique Client Code.
m.Stock is a SEBI-registered broker, which allows you to open a Demat account within minutes. Follow the below-mentioned steps to successfully open a demat account on m.Stock:
Enter your mobile number and fill out the online KYC form.
Verify your personal information, including address proof, identity proof, PAN number and date of birth.
Select the payment option of your choice and make the payment online.
Add your bank account and complete your profile.
eSign the demat account-opening form.
Upon successful verification, your demat account will be operational within 24 hours, and login credentials will be shared on your registered email id.
Apart from the easy process of opening a demat account, m.Stock offer you the following benefits to make your investing journey smooth and hassle-free:
Zero brokerage
Fast and intuitive app and web platform
Free access to Pay Later (MTF).
Quick, paperless onboarding
Summary
Any investor who wants to purchase and sell securities requires a demat account. It will not only protect your securities but also ensure you access various services provided by online brokers. Therefore, create your Demat account to purchase securities and use multiple services to help you make better investment decisions.
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FAQ
What to check before opening a Demat Account?
Before opening a demat Account, keep these points in mind:
Type of broker you are choosing
Account opening and maintenance charges
Support and services provided by your broker
Feedback about your broker in social forums
What is the risk of opening a demat account?
There are a few risks in having a demat account, such as:
Annual Charges. Most brokers charge annual maintenance charges for your demat account. Therefore, it’s pertinent to know about these charges before opening the demat account.
In today’s digital world, you need to have basic computer literacy to manage your demat account. As everything is done online, you should know how to manage your portfolio and buy/sell shares online.
What are the rules of the demat account?
You need to follow the guidelines recommended by SEBI to open and run your demat account in India. These include the following:
Demat account charges are predetermined, meaning you can prevent stock brokers from overcharging.
You should be the account holder.
You should link your PAN card to your demat account as per KYC rules.
No minimum amount is necessary to maintain your demat account.
Investors need to pay the annual charges and applicable brokerage charges.
Is opening a demat account worth it?
Yes. The main advantage of having a demat account is that it gives you access to all your investments.