Holding the right Demat account can save you from unnecessary investing costs. You need to take care of a few points while participating in the stock market. One of these is Demat account charges.
There are various stockbrokers available to offer Demat account services, and you may find varied costs attached with each one for their services. Some provide a free Demat account with a trading account, while others charge for opening a Demat account but waive off account maintenance cost for the first year. Many others may provide you a free Demat account but ask to open a separate trading account at a cost.
Demat Account Opening Charges - The Real Cost
Here are the Demat charges that you need to understand before opening a Demat account with any of the stockbrokers.
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Demat Account Opening Charge
It is simply a fee to open your Demat account with a stockbroker. However, you will find it free with most of the stockbrokers. And if a stockbroker is charging it, it will be very nominal.
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Account Maintenance Cost
When you want the services of a company, you are required to pay the price. Similarly, stockbrokers charge a fee for their services but nominally. Account Maintenance Charge (AMC) is a small amount to be charged annually. And with many brokers, you can find waived off for the first year of opening a Demat account. Later on, it will be charged annually. You can pay a lifetime fee as well to make your Demat account cost-effective.
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Custodian Fee
National depositories, NSDL and CDSL, charge the custodian fees from stockbrokers. You will be charged to provide you with the national depository services. It depends on the number of securities you hold in your Demat account. Stockbrokers, who are the intermediary between the national depositories and an investor, charge custodian fees monthly. Custodian fee is also known as Demat account safety charges. Stockbrokers may charge the safety fee for both credits and debits of financial securities to a Demat account.
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Transaction Fee
Stockbrokers provide you Demat account services intending to make profits from the transactions you made using your Demat account. Stockbrokers charge a nominal as transaction charges. It will be charged each time you buy/sell financial securities from your Demat account. It is the actual fee of stockbrokers charged for their services.
Now you can compare varied costs attached with a Demat account with different stockbrokers. Open a Demat account with a SEBI and exchange registered stockbroker to make the entire investing procedure, i.e., holding shares, monitoring, tracking, hassle-free, and cost-efficient.
What Demat Account Offers Against Cost
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Safety
A Demat account keeps your financial securities safe electronically. You need not worry about any loss, damage, forged, or fake share certificates. The central depositories record every transaction that takes place on stock exchanges.
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Convenience
You are getting online storage for the maintenance of your securities. It is a convenient way of investing as well as monitoring your financial securities.
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Accessibility
Since a Demat account is an online repository of financial securities, you can access your Demat account from any corner of the world and at any point in time.
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Lower investing cost
Demat accounts have lowered down the investment costs in the monetary value as well as time that lead to significant savings.
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Multiple securities
You can hold a number of financial securities in your Demat account. It is not just limited to shares. You can invest in bonds, exchange-traded funds, mutual funds, and other debt securities. Hold all of your investments under a single roof conveniently.
Thus, several benefits are offered cost-effectively with the right stockbrokers. You can choose a broker between a full-time broker or a discount broker. Type of broker is also a matter of varied Demat account charges. However, the process of opening a Demat account is similar to every broker.
How to open Demat and trading account
You need to choose a stockbroker. You can compare the cost involved in opening a Demat account with different stockbrokers.
Access their Demat account opening online form and submit with requisite documents - your PAN card, Income Proof, Identity Proof, Cancelled Cheque, Passport size photo. Document requirements may vary.
Go to the in-person verification process and get verified for a Demat account. Once the verification process is completed, you will receive your login credentials and a welcome letter from your stockbroker. Log in and start investing at the comfort level of your home.