scorecardresearchThings to consider before opening a demat account

Things to consider before opening a demat account

Updated: 17 Mar 2022, 10:22 PM IST

Demat accounts have made trading very easy. However, before you dive into opening your demat account and kickstart trading, it is important to consider the services provided by the depository participant. Choosing the right DP and the interface platform will be useful in the long run.

A demat account holds all the shares and certificates in an electronic format.

A demat account holds all the shares and certificates in an electronic format.

A demat account holds all the shares and certificates in an electronic format. It eases the process of buying and selling shares while eliminating all the risks like theft, loss, fraud and damage. With a demat account, you can track all your transactions and portfolios from one account which makes it easier to access from any part of the world.

Check for the services provided

Apart from knowing how to open a demat account, there are a lot of things that you need to know about a demat account. To begin with, you should know how to make the right choice about a demat account and for that, you are required to do a lot of research and compare a lot of options. 

Choosing the best-suited depository for your demat account is the first step in this direction. Secondly, consider the convenience and ease of opening the account. The best demat account which offers convenient operation can be opened using e-KYC.

Also, make sure to check the Basic Services Demat Account (BSDA) being offered by your depository participant. SEBI has mandated every DP to provide these BSDA services which include basic and limited services at reduced costs. 

These accounts are best known as basic demat accounts or no-frills demat accounts. The most important factor of consideration is the charges and fees of the depository participant and the account charges.

Ensure a strong interface platform and application

Additionally, make sure that the user interface of the platform that you choose to open a demat account with should be well-equipped, efficient and convenient to use. A lot of times when individuals shift their entire focus on minimising the charges, they end up compromising on the quality of the interface. 

It is important to note that you will be trading from this account in future and will be spending a major chunk of your time trading. This means that you would not want trouble and inconvenience every time you buy or sell shares.

Make sure that the trading platform chosen by you has a reliable and well developed mobile application. This will help you in tracking and trading from anywhere at any time without the hassle of logging in through the desktop. Along with being quick and efficient, it is very important that the application is safe and secure as well. This shall help in the prevention of theft and fraud.

Look for add-ons and efficiency

Next, check for all the add-ons and investment services offered by your DP (Depository participant) through the trading platform. Well-known DPs offer complimentary learning modules and investment services. These services help you in growing your money as it enhances your understanding of investments and makes you an aware investor.

Traders often have to keep dematerialisation and rematerialisation of their share certificates. For this purpose, it is very important to choose a demat account and DP that will do it in the minimum time possible. 

Secondly, it is equally important to know about the process that is followed by your account and DP for the same purpose. The quicker the transfer facility of the demat account, the smoother your trading process will be.

Ensure verification of the broker and financial aides

It is best advised that you cross-check the details and credibility of the financial advisor or broker before you trust them with your money. Be a part of all the trade-related discussions with your broker and do not forget to do complete research from your end as well. Do not ignore red flags like the forceful attempts of selling a particular asset. It is advised that you open your demat account with a trusted institution that is registered with SEBI.

Keep a track of the fees

When you open a demat account you are charged for opening the account, maintaining it, transactions, backup facilities, etc. Make sure that you read the document mentioning all the charges and fees thoroughly without missing out on any terms and conditions. 

A lot of time, the hidden charges that are mentioned manage to escape the eyes of the account holder, this can be a trouble to the pocket in the long run. These charges vary from one broker to another, make sure you choose the best deal with maximum benefits from a trusted broker.

Seek the assistance of an experienced advisor

Trading is not a child’s play and requires well-thought-out moves that will not tarnish your finances. If you are a beginner it is better to consult an unbiased and experienced financial advisor before you begin trading. 

The advisor will be able to guide you by keeping in mind your risk appetite, budget, career and life goals along with other parameters. A well thought out plan shall help you grow your wealth with the least risk involved.

The mere decision of opening a demat account will not suffice your journey to buying and selling shares. You are also required to keep in mind the services offered by the depository participant chosen by you for your demat account.

Additionally, in order to ensure a smooth trade, it is very important that your demat account is affiliated to an efficient interface. Remember to make the most of the add-on modules and lessons provided by the depository participant and carefully understand the investment services being offered. Not only will your depository participant help you with your demat account but can also be your genie to grow and secure your money!


Opening a Demat account
First Published: 10 Mar 2022, 09:20 AM IST