You have decided to invest in the stock market. You may have applied for a Demat account or maybe you already have one. You would naturally be excited about trading stocks, but at the same time hesitant about the terms and risks involved. This article will give you a few tips you need to know before opening a Demat account so that your first experience trading stocks is smooth.
What is a Demat Account?
A Demat account is a depository-cum-retail trading facility for shares of companies. It allows investors to hold their securities and shares with a central depository (CDSL). The account holds the securities issued by companies and acts as a custodian.
The word “Demat” is a short form for Dematerialisation. So, a DEMAT account is nothing but that. A Demat or securities deposit account (SDA), is a type of stock ownership in India where shares are stored electronically in a central depository rather than in a physical stock certificate, just like any other kind of electronically held asset.
Demat Account Opening Requirements
Here are the various requirements you need to keep in mind when opening a Demat account.
The documentation for opening a Demat account is like any other financial account. You will have to submit some relevant documents that confirm your identity and financial details. One of them is a PAN card. Besides that, you will also need to share your address and identity proof.
The documents are usually standard but may vary a bit based on the broker and individual preferences. For identity proof, you can submit a copy of your passport or driver’s licence. A ration card or Aadhar card copy will be sufficient for address proof.
- Account charges
A Demat account usually involves two types of charges. One you will have to pay when opening the account and the second will be for holding it. The fee amount will vary between different depository participants (DP) who offer different types of Demat accounts.
The account opening fee is the necessary charge you will have to pay when opening your account. Some DPs waive off these charges to offer a benefit to their customers.
You will also have to pay an annual maintenance fee for holding your account. The charges are for the convenience and account infrastructure offered by your DP. The charges will vary depending on each DP.
Besides these charges, you will also have to pay transaction fees for each trade you make. The fees will vary and depend on several factors. Most DPs offer discounted transaction fees for an improved trading experience.
Demat Account Opening Procedure
It will not take much for the procedure to get completed once you have adequate documentation. In this virtual age, you can also open a Demat account online from the comfort of your home. Here are a few things you need to keep in mind.
- Carefully research the details of your DP. Check their account opening details, transaction charges, trading resources, and other details.
- Check out the website of your DP and look for different options they offer. Browse through the Demat account opening section to look for steps you need to follow.
- You will have to fill out the relevant form with your details and share the required documentation.
- It will not take much for your account to get registered successfully if everything is in place.
- Ensure that you provide details accurately and share all the required documents. Any lapses could result in subsequent delays.
Entering the stock markets has not been easier than ever before. With the launch of trading platforms like Choice India, anyone can become a trader in the stock market and fulfill their aspirations. Getting started with opening a Demat account is simple and won’t take much of your time. So, register yourself today on our platform and be a part of millions of other traders.