How to Choose a Demat Account – 5 Great Tips
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It is important to open a demat account to participate in the stock market. The account will allow you to hold shares in your custody in a dematerialized format. It is very similar to a bank account where you hold your money. You hold securities in a demat account. Before you open such an account, you need to keep the below-mentioned tips in mind.
Ease of opening
The first thing you need to consider is the ease of demat account opening. You can open this account through an e-KYC process where the process of account opening can be authenticated through the Aadhaar information. It will reduce the time to trade and you only need to do a self-identification in person or through a video camera.
Charges of maintaining the account
Once you open demat account online, you will have to pay a charge if you keep it idle. Opening a demat account is free of cost. However, you need to consider all the costs associated with it. There is an annual maintenance fee, which is billed to your account each year. In addition, there is a cost when you ask for a physical copy of the demat holdings. The demat request will be charged on a per certificate basis and there will be a cost when the debit instruction slip is rejected. You need to consider all the costs before online demat account opening.
Convenience in banking and broking
Trading in securities has moved from physical form to trading apps on smartphones. You need to choose an account, which has a seamless interface. It is ideal to opt for a 3-in-1 account, which connects the bank account, the trading account, and the demat account. Banking and broking will become easier and convenient for you.
Online analytics on your holdings
Depository Participants (DPs) provide services beyond the regular account statements. Choose a demat account where you enjoy services like a direct call to action for trading clients, analysis on the inflow and outflow, real-time valuation of the portfolio, thematic concentration, and timely alerts. These value additions have great benefit in the long run.
Turnaround time on allied services
Consider factors like the management of dematerialization of physical shares or the timely debits and credits of the shares. Enquire about the opinion on the quality of services offered by the DP. Avoid the DP if he is in news for the wrong reasons. Consider the hygiene factors, which demonstrate the efficiency and commitment of the DP to service standards.
Follow these five effective tips to choose the right demat account for trading in the stock market.