A Demat account holds your investment holdings in an electronic format. Choosing the right demat account is important for any investor looking to manage their holdings efficiently.
If you are just starting to invest in the stock market, knowing which is best demat account for trading can seem confusing from so many available options. To help you with that, in this article, we will cover how you can select the top demat account in India.
Choosing the best Demat account in India involves considering several factors to ensure it meets your investment needs. Here's a guide to help you select the right Demat account:
There is no legal requirement to have your trading and demat accounts with the same broker. It's literally about what works best for you. Typically, brokers offer combined trading and demat accounts for convenience. This means your bank account funding, demat credits and debits, and bank credits all happen smoothly.
However, if your broker lacks a DP license, you must submit a debit instruction slip (DIS) to your broker promptly after selling shares. Delays with the DIS can lead to short delivery and potential auction losses.
Having the same broker for both trading and demat accounts simplifies and streamlines the process.
Demat accounts come with various costs. You need to compare these costs if you are looking for the best Demat account with the lowest brokerage.
The main one is the Annual Maintenance Charge (AMC), which is billed yearly and typically ranges from ₹500 to ₹800. Depository Participants can't charge you for crediting shares, but when you buy or sell shares, you have to pay brokerage charges.
Additionally, DPs may charge for services like physical statements, duplicate statements, or more frequent statements of holdings and transactions. If your Delivery Instruction Slip (DIS) is rejected, you will incur a penalty. There are also extra costs for dematerializing shares and for demat request forms rejected due to technical errors.
To get a complete picture, consider all these costs and aim to save on expenses without compromising service quality.
Choosing the right Depository Participant (DP) is all about the quality of service they provide.
Consider how quickly they can dematerialize your physical shares, whether corporate actions are automatically credited to your demat account, and how efficiently they handle issues like pledges, liens, and customer complaints.
It's a good idea to ask other customers about their experiences and listen to market feedback before making your decision. You can check online reviews to get a clear picture of this.
You can open the best Demat account in India from the comfort of your home in just 10-15 minutes using your mobile phone. Follow the given steps to open a demat account:
1. Choose a Depository Participant (DP) Website: After proper research and consideration, choose a safe and secure DP website of your liking and visit the website’s page.
2. Choose the Option ‘Open Demat Account’: When you arrive at the DP website of your choice, select the ‘Open Demat Account’ option and then follow the on-screen instructions.
3. Complete and Submit the Demat Account Opening Form: To open a free Demat account, start by filling out the online application form with accurate details. Make sure to provide necessary information such as your phone number and email address, among other required details.
4. You Will Receive a One Time OTP: When you fill out your details at the start, you will receive an OTP before moving forward.
5. Submit the Documents for Demat Account Opening: Submit your PAN card and Banking details. Enter your PAN number and the bank information you’ll use to make the transaction.
6. Finish The E-KYC: Verify your KYC information online. The KYC details you provide are checked online.
Maintaining a Demat account is crucial for smooth trading and investment. Here are some tips to help you manage it effectively:
Securing your Demat account is important. Yes, this involves setting strong and unique passwords and never sharing your login credentials with anyone.
Additional security measures like two-factor authentication (2FA - second layer of authentication such as password + biometrics or third party OTP T-OTP) can further enhance the safety of your account. Remember, a secure account is the first step towards safe investing.
Monitoring your holdings in your Demat account is essential. This means regularly reviewing the stocks and other securities in your portfolio.
For example, if you own shares of a company that has recently reported lower-than-expected earnings, you might want to reassess whether it’s still a good fit for your investment strategy.
Regular monitoring helps you stay on top of such developments and make timely decisions to buy, hold, or sell. You can do this by requesting a Demat account holding statement from your broker.
Knowing about the charges associated with your Demat account is important for effective management. No matter if you are opting for the top demat account, higher charges can eat your gains.
These charges include annual maintenance fees, transaction fees, and other service costs. Knowing about these fees helps you avoid surprises.
Do you know that many investors in India presume that, just like savings accounts, they need to maintain a minimum balance in their Demat account to keep it functional?
However, the fact is, there is no such requirement.
Your Demat account remains active even if it has a zero balance, and there's no requirement to maintain investments in it at all times. This misconception might arise from the practices of traditional banking, but it doesn’t apply to Demat accounts. However, note that you would still need to pay account maintenance charges. You can pay these charges via demat account balance or via online or bank transfer, too.
A demat account if not used for 365 days, becomes dormant. If you wish to keep your account active, the only thing you need to do is use it. You do not necessarily need to trade to keep it active, but accessing your accounts, i,e. once a month keeps its status active.
Picking the right demat account requires you to analyze fees, features, customer service, and security measures. By knowing what you want and comparing your options, you can choose the best Demat account in India that can make trading and managing your investments easier. A good demat account can really improve your trading experience, so take the time to choose one that matches your preferences and requirements.
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Joby’s educational background includes a Bachelor of Engineering in Electrical Engineering from Madurai Kamaraj University. He is also an alumnus of Mahatma Gandhi University, which further solidifies his academic credentials.
Joby John Meledan is an accomplished professional with over 23 years of experience in the securities market and operations field. Currently he is serving as the Senior Vice President of Operations at Sharekhan. Before his current role, Joby was the Chief Operating Officer at Marketsmojo.
He joined Sharekhan in November 2009 as an Assistant Vice President (AVP) and was later promoted to the position of Head of Compliance in October 2016. Before his tenure at Sharekhan, Joby gained valuable experience at DSP Merrill Lynch Ltd, where he worked as a Senior Manager. He also held managerial roles previously at Sharekhan and the National Securities Depository, where he developed a strong foundation in financial management and operations.
