A trading account is necessary for buying and selling shares in the stock market. Without it, there isn’t much use for a Demat account, except to hold your financial assets. Therefore, it is a wise idea to link both these accounts when you’re opening a Demat account. Alternatively, you could also opt for a depository participant like India Infoline, who offers both Trading and Demat accounts under one roof.
Ensure you're aware of all the Demat account charges:
Before submitting your Demat account opening form, always read through the statement of fees and charges. You could also compare them with other depository participants to ensure that you’re getting a good deal. Being aware of the charges upfront ensures that you are not caught unawares once you’ve begun trading.
Fill in your details correctly:
Remember to double check the details in your Demat account opening form before submitting it. This way, you can make sure that there aren’t any mistakes or fields left unfilled. Errors like these could lead to your application getting rejected. To ensure that your details are all correct, you could also enlist the help of a third person to verify your form before submitting it.
File your nomination:
Most people tend to miss this step while opening a Demat account. It’s not a good idea to put off filing a nominee, because you might tend to forget to do it in the future altogether. Having a nominee for your Demat account is critical, since it makes the process of transmission of shares much easier in the future.
Tips to Choose the Best Demat Account for Your Requirement
When it comes to choosing the right Demat account for you, your needs and requirements play a significant role in influencing your choice. Here are some points that you should consider when you’re opening a Demat account.
Type of depository participant:
Primarily, there are two different types of depository participants - discount stockbrokers and full-service stockbrokers. A discount stockbroker generally does not provide any other services apart from share trading and trading in the derivatives segment. On the other hand, a full-service stockbroker like India Infoline offers plenty of additional services such as mutual fund investments and investment in IPOs. The depository participant that you choose can shape your stock market experience significantly.
Fees and Demat account charges:
The fees and charges that DPs charge vary widely from one to another. Therefore, it’s always a good idea to thoroughly read through the fees and charges section before signing up with a depository participant for opening a Demat account. This will prevent you from getting caught unawares with hidden charges or fees at a later point in time.
Customer support is another important metric that you can use to choose the best Demat account. Your depository participant should possess a robust customer support mechanism to help resolve queries and issues. When things go out of control, you should be able to bank on your DP to help bring things back on track as soon as possible.
Power of attorney (PoA)
A Power of Attorney authorizes some other person to operate your DP account on your behalf. You could authorize any individual to exercise PoA rights after submitting it to the DP.
You have the option to grant PoA in favour of your broker and/or DP to operate your account, i.E. Make transactions in your bank and DP account and buy or sell shares on your behalf. However, it is advised to carefully read and understand all the clauses of the PoA before signing it.
PoA is not a mandatory facility and thus, purely optional. No stockbroker or DP can deny services to you if you refuse to execute it. You can revoke a PoA at any time.
Other Features Of Demat Account
Consolidation: If you want to consolidate various folios of a particular company into a single folio, you can forward the physical certificates along with the letter signed by you to the RSTA of the company.
Before signing up with a depository participant, you also need to evaluate the trading technology used by them. In order to conduct your trades in a smooth and seamless manner, it is essential to have a user interface that is clean, clutter-free, easy to understand, and user-friendly.
Not all depository participants offer the same set of features. Therefore, take a look at the features and benefits offered by various DPs before choosing the right one for your trading requirements. Some of the must-have features for quick and effective trading include:
Real-time stock feeds
Bid and ask spreads
The ability to customize watchlists
Quick analysis on stocks and companies
Details of your portfolio