If you want to trade stocks in India, you compulsorily need a demat account for the same. Read this post to know five common mistakes that traders commit when opening the demat account.
A demat account or a dematerialised account is a digital account which enables buying and selling of shares. Every individual who wants to trade shares needs to have a demat account compulsorily. It is in this account, that the purchased shares are stored electronically. All the electronic settlements with respect to the shares require a demat account number.
New traders often find the whole process of opening a demat account confusing. Continue reading to know five common mistakes that traders commit when opening a demat account.
- Not Checking the Brokerage Charges and Other Charges when Opening the Account
When you buy and sell shares, you are required to pay a commission to your broker. This commission is known as brokerage and varies between different brokers. Some charge it on a percentage basis while many others have a fixed fee.
Apart from the brokerage, there is also an annual fee charged by your broker. Ensure that you check the brokerage, annual fee and other charges of the selected broker before opening the account.
- Not Knowing the Documents Required to Open a Demat Account
There are several stock brokers in India. Moreover, even banks now offer demat accounts. To open a demat account, you’ll be required to submit a few documents to your broker. These documents include your identity proof, address proof, PAN card, bank account details, and photograph.
As the document requirements can vary between brokers, it is better to check the requirements of your broker to ensure that you have all the required documents.
- Not Going through the Trading Platform and Technology
While most of the new traders only focus on the brokerage charged by the broker when opening a demat account, it is important to also check the trading platform offered by the broker. There are brokers who apart from trading software and online trading have mobile apps for trading.
Moreover, there are brokers that allow you to view all your investments in stocks, commodities, currencies and mutual funds from a single platform. Consider such brokers for maximum convenience.
- Not Checking the Additional Features
With the advancements in digital technologies, trading platforms now offer a host of additional features. Some important features that your demat account should offer are-
- Watchlist of preferred stocks
- Real-time price of all the stocks
- Profit and loss statement
- The current value of the Portfolio
- Ask and bid price
- Margin money
- History of past orders
- Providing Inaccurate Information
If you know how to open a demat account, you might already know that you’ll be required to provide a lot of details to your broker. This includes the name of the account holder, mailing address, details of the guardians in case of minor accounts, bank account details and nomination declaration.
Ensure that you cross-check all the information you provide to avoid any kind of errors that can delay the account opening process.
Opening a demat account is now easier than ever. Just avoid the mistakes mentioned above, and your demat account will be up and running in a matter of few days.