In exchange for different costs charged by a stockbroker for providing a demat account, you get a secure platform for trading, ability to trade in various securities, easy access through mobile and web applications, and many other features. However, learn the different types of demat account fees and charges before learning how to start trading in the share market. By managing to lower the brokerage and some other costs associated with a demat account, you can increase your profit percentage easily. Here are the different types of demat account fees and charges that you might need to pay after opening a demat account:
Account opening charges
Though some stockbrokers will allow you to open a demat account for free, most of them charge a nominal accounting opening fee. Earlier, the account opening charges used to be anywhere between INR 700 to INR 900. However, due to the increase in the number of stockbrokers who offer online demat services, these charges have been reduced significantly.
Custodian or safety fee
Depository participants need to pay a one-time fee known as custodian fees to the depositories. In turn, they might levy a monthly fee known as custodian or safety fee from the investors. However, there are many DPs who don’t charge it from their customers. The monthly fees depend on the total number of stocks, bonds, and other securities held by you in your demat account. A nominal INR can be charged for every ISIN by the DP. Before, the DPs used to levy a fee for both crediting and debiting securities from the demat account. However, these days, they levy fees only debiting the securities.
AMC charges
Most stockbrokers charge an AMC (Account Maintenance Charges) in exchange for the services offered by them. Some brokers also waive off these charges for the initial year while most of them charge AMC between INR 300 to INR 900 per year. You should compare the AMC levied by different stockbrokers before initiating the demat account opening procedure.
Transactions charges
Demat transactions charges refers to the charges levied by a stockbroker for the buy and sell transactions that you execute through your demat account. Some stockbrokers levy transaction charges only when the securities are debited from your demat account. However, some stockbrokers levy transaction charges for both debiting securities and crediting them into your demat account.
Some of them even charge a flat monthly fee and some of them levy the transaction charges as per the number of transactions you have carried out in a month. Therefore, you must inquire about the transaction charges with a stockbroker before subscribing to their demat account.
Stockbroker
A stockbroker might be either a full-service broker or discount broker. Broking firms allow you to choose between full-service brokerage and discount brokerage plan as per your requirements. The brokerage, AMC, and other charges might vary as per the type of stockbroker you choose for your demat account. It is because the demat services offered by them vary accordingly.
Also, the brokerage depends on the type of securities you are trading with. Intraday charges are usually higher than equity delivery charges. For futures and options, you might get a flat fee per trade. The brokerage for other securities might vary from one broker to another. Once you have a fair idea about the brokerage and other charges, you can focus on how to trade online and how to book profits by investing smartly.
Trading in the stock market through Demat account:
Stock market trading is known as selling and buying financial securities to earn profits from market fluctuations. The stock market trading can only be performed with a Demat account in the present time. Before trading, you need to open a Demat account with any broker. Different financial institutions and other financial firms provide the service of Demat accounts at low demat charges. After opening an account, you can buy and sell any share and security in the stock market.
Procedure to buy or sell the securities in the Demat account:
If you have a Demat account, then you can easily add money to the account through a Demat account. After the addition of the money, you can select the securities after analysis of return, risk, and different fundamentals of the company. Now, you can place an order to buy with a simple click, but before you click to buy, you must know different types of the orders like spot order, limit order, market order, etc. If you click on the wrong option, then it can harm your money. After clicking on the buying order, you can buy the securities. The money in your Demat account wallet will be used for buying the securities.
The selling process is also quite similar. You can click on the sell option in the account for a particular bought security. The brokers charge different charges for the Demat account transactions. You should select the broker that charges a low cost for the transaction.
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