Steps to Open Demat Account Online
The most important part of starting your journey to the world of stock trading is the moment you open demat account online. It is the most basic requirement to start stock trading. Most of the people new to the field of the stock market are often ill-informed of the importance of demat accounts and How to open Demat account. There are many articles that are available in the market on demat accounts and several websites which show the step-by-step procedures to open demat accounts online. Most of the beginners generally use this information to decide on which demat account to choose and learn about demat accounts. The problem lies in the fact that most of these articles and websites are focussed on promoting a certain product or a certain firm’s demat accounts. The basic information about demat accounts and How to open Demat account online will be dealt with in the following part of the article.
Know what Demat Accounts are
Demat accounts are accounts that are affiliated with National Securities Depository LTD (NSDL) or Central Depository Services LTD (CDSL) that are meant to store your securities such as shares, mutual funds, bonds, etc., in a digital form. Thus, they are safer than having physical share documents or bonds that are difficult to store safely. They are also less expensive in the sense that you do not need to pay stamp duty for the share documents. The securities stored in the demat accounts can be transferred easily when needed. Demat accounts are used in collaboration with trading accounts for the purpose of online trading and are a basic necessity for any online trader.
Steps to open a demat account:
Though many people may disagree with me, I really recommend researching on the demat account before actually opening one. Know the features of different types of demat accounts and different depository providers before actually getting in touch with them.
- Sort out the Documentation:
While opening a demat account online, generally there will only be a limited time period before the server connection will be refreshed. Hence keep the necessary documents ready while opening an account. You will need a saving bank passbook and statements, passport size photo, valid ID card, PAN card, and Aadhaar card.
- Choose the Depository Participant:
You can choose between various Depository Participants like commercial banks such as SBI, ICICI, Kotak and HDFC or other full time and part time depository participants like Sharekhan, Zerodha, Angel Broking, etc. Each of these firms offers various services and features at different rates.
- Brokerage rates:
Each of the firms has different brokerage rates that should be paid while opening the account and annual charges levied by the firm. Choosing an account with high brokerage rates could eat into your profit.
- Read all the documents carefully:
It is advisable to read all the necessary documents before signing them. The firms offering demat account does not always specify all their policies and details online, but the terms and conditions document contains all the details you would need. So don’t skim through the document and read it carefully.