10 Factors To Consider While Opening A Demat Account

10 Factors To Consider While Opening A Demat Account
Are You thinking about opening a Demat account to make an entry into the stock market? 

And you are wondering as a newbie, if you will survive here for long? Well, let us tell you one thing, you gotta know about a few important hacks if you are here for the longer run! Why do you ask? Because for a newbie like yourself, fresh in the world of trading and equity markets, the process of opening a Demat account can seem to be a cumbersome task. Today, almost everyone around you has a demat account. Today, an online demat account enables you to hold your shares in an electronic form. This has come as such a relief as the old method of holding shares in physical form became so daunting. When you open a demat account it is more of a responsibility, You have to make sure that you checkmark a lot of factors. 

Should you not open a Demat account? Absolutely yes, you should! Online Demat accounts are the safest way to buy and hold shares. At this point when you can tap in on a lot of diversified investments, trading in shares on online platforms is the best way to cash in on the lucrative opportunity to trade in financial markets. 

Read Also - Top 5 Free Demat Accounts In India

Today, we are going to discuss 10 factors while opening a demat account : 

1. Good Will

  The first thing to keep in mind is that You are looking for a platform with a strong investor base and a renowned presence across india. This will help you avoid brokers who make fictitious promises of good returns but are never able to deliver favourable results. Sit down and take some time to perform some sort of research on the depository participant’s goodwill in the market, including customer base, years of operation and the number of branches to check the size of their geographical footprint. 

2.Online Facility 

Demat Account online

Next, check if  the DP offers an online demat facility. This may sound like a small issue initially, but in the financial market where time is money, you should make sure to keep everything available online. In 2021, The ideal DP is one that offers you online demat access as well as a seamless link to your trading account and your bank account which you can operate online. 

Read - Benefits of Demat Account

3.Types of brokerage

Benefits of Demat Account

If you have started hunting for the best brokers in the country, you need to remind yourself that there are two types of brokerage firms: discount brokers and full-service brokers.  If you are going to choose a discount brokerage, then remember the house will only carry out your commands as an instruction and may also help you with equity and derivative trading services.

While a full-service broker will provide you with seamless trading and investment opportunities in mutual funds, equities, options, futures, commodities, currency, IPOs and more. If you do your research properly, you might be able to find a broker that provides portfolio management and advisory services, as well as detailed fundamental and technical research reports. 

4.Differentiate Between BSDA and Normal account 

This is an important question you have to ask yourself before you open an account.  This factor is based on your size of holdings. If you are looking to have an account with a holding size less than INR2 lakh then you can make do with a Basic Services Demat account. That is a much cheaper option in terms of AMC and you can simply choose the option which is more favourable for you. 

5.Security

Demat Account Security

To have an online Demat account is the best thing when it comes to ease and flexibility but remember every coin has two sides. Make sure your Demat account is equipped with the highest levels of security in terms of data encryption when the data moves between computers and servers. This is an important aspect keeping in mind the recent rise in cyber-attack cases. If you have decided to put your hard-earned money to trade, then make sure it is safe from all ends. 

6.Paperless process

If you are opening an online Demat account, the whole process of opening your account must be as hassle-free and contactless as possible, especially during COVID times when the whole country is in a state of lockdown. Majority of DPs today have turned the whole procedure online with a simple application form and documents submission. You must opt for a service provider who offers paperless account opening with minimum documentation. 

7.Access to Online Account 

An ideal DP must provide you with an online platform that can offer details about your holdings, valuations, transaction statements, portfolio, etc. Most of the DPs also provide instant notifications on your investments and send you smart investment tips. You should be able to access and operate your Stock Holding account from any device available and also complete transactions with a simple click of a button. 

8.Perform a background check 

Background checks are very important. Check if there are any pending complaints on the DP. You can simply check this information on the official SEBI website, NSDL / CDSL website or even find out information on online forums. Also, remember one thing, not all online forums are reliable but then if you are skeptical, then do a thorough check. If you still witness consistent complaints on all forums it is a clear warning about the DP’s service standards and complaint redressal mechanism. 

9.Range of Commodities

A Depository participant that offers vigorous trading platforms and provides you a diverse range of financial products from Stocks, Derivatives, Government of India (GOI) bonds, Fixed Income (FI) products, Mutual Fund , National Pension Scheme, investment in Gold, Insurance solutions from one unified account is good. This kind of platform basically enables you to keep a watch and track all your investments from a single platform making it easy for you to compare and manage your products. 

Read - Best Demat Accounts in India

10.Charges 

Best Demat Accounts in India

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