A dematerialization account, widely known as a Demat account, helps reduce the hassle of physically maintaining(buying/selling) shares (like on papers and documents) and makes owning investments, mutual funds, bonds, and insurance work much more accessible. Without a Demat account, the SEBI (Securities and Exchange Board of India) does not allow anybody to trade shares/securities.
Investors use a Demat account to buy or sell shares and maintain the purchased shares electronically. It keeps a proper record of all investments made. The Demat accounts in India are controlled by two depositories, National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL).
Benefits of having a Demat account
- Since it only holds shares, securities, and not actual cash, there is no minimum limit or Balance to maintain, unlike other bank accounts.
- Since it is electronic/online, it’s safe to use. The best Demat accounts of India reduce the risk related in the form of damage/theft/ loss to physical shares.
- A Demat account allows investors to access their investments and records with Just one click easily.
Documents required to open a Demat account
- Proof of address (ID proof, maintenance bills)
- Proof of identity (ID proof documents, job cards, passports)
- Proof of bank account and income (name, MICR, bank’s IFSC code)
Are there charges for opening a Demat Account? What other charges or fees do one have to pay to get a Demat account?
- Account opening charges vary for every service provider. Some brokerage houses offer zero opening account charges, whereas others have a fee.
- Demat charges– Demat charges or Dematerialisation charges are for converting your physical share into electronic form. The fee depends on the demat platform you are using.
- Demat accounts do not have a minimum balance, but they do have an annual maintenance charge (AMC) which can vary from INR 50- INR 1000, depending on the platform you choose
- Most of the platforms have a brokerage fee- it is a charge fee levied for every security that you buy or sell. The type of security usually decides the brokerage fee.
Top 10 Best Demat accounts: –
Zerodha
- Opening charge- Rs.200(online) & Rs.400(through a Aadhar card)
- Demat AMC- Rs.300+GST
- Delivery charges- 0.
Upstox
- 0% commission fee on investing in mutual funds/IPO
- Account opening charges- zero
- Demat account AMC – Rs.150 (free for the first year)
ICICI direct Demat account
- Demat opening charges – 0(free)
- AMC – For the 2nd year- Rs.300
- Margin money- 75%
- The brokerage fee/equity fee/AMC these all vary based on the plan you have chosen
Share Khan Demat account
- Account opening charge- Zero
- Demat AMC- Rs.400 (free for the first year)
- Minimum brokerage charges for per scrip settlement delivery is Rs.16
HDFC account
- Demat account opening charges- zero
- Demat AMC- Rs.750 (free for the first year)
- Margin- 75%
- HDFC has various plans for its users; the Equity (delivery, intraday, etc.) charges vary based on your chosen plan.
Kotak Securities
- Mobile stock trading app available
- Account opening charges- zero
- Demat AMC- Rs.50
Axis direct demat
- Account opening charge- zero
- Account AMC- Rs.650, the first-year maintenance – zero
- Minimum Brokerage charge: – Rs.20 per trade
- Payment gateway charges (for non-axis bank users)- 9rs.
- Platforms are available on various devices.
Motilal Oswal Demat
- No first-year AMC (Annual maintenance charges) from the second year onwards. It’s INR 299-400 (per annum)
- Trading platforms provided by the brokerage house are advanced, and the platforms suit all types of devices
- The brokerage, AMC, and equity charges vary upon the pack (plans) you choose.
Angel one/ broking
- Free margin trade funding for 30 days
- Account opening charges- zero
- Demat AMC- Rs.450
- Has an investment advisory tool where you put in information, and it shows you valuable options to invest (in your interest)
5paisa Demat account
- Demat AMC- around RS. 350+ GST
- No margin money required
- There are various transaction fees
- Charges on Equity intraday/delivery- Rs.20 on every executed offer
Let us talk about trading accounts!
A trading account is like any other investment account containing your securities, cash, etc. Many people get confused between a Demat and a trading account. It permits you to store the already bought shares, and a trading account is more focused on buying and selling shares/assets in the stock market. There are different types of trading accounts – Equity, offline/online, commodity trading, etc.,
How does a trading account work?
A trading account acts as a link or connection between a bank account and a Demat account. The order is placed through a trading account if someone wants to buy or sell shares. Let’s say the investor wants to buy shares, the process of stock exchange happens, several shares get credited into the investor’s Demat account, and a sum gets deducted from the bank account.
Perks of using a trading account
- Multiple stock exchanges are available on a single platform.
- Easy transaction process- easy, hassle-free, and safe transaction process available by using a trading account
- Flexibility- as Trading platforms are turning into app-based platforms on various devices such as laptops, smartphones, etc., now you can access all your records and transactions and buy/sell shares.
Documents required to open a trading account
- Proof of identity (ID)
- Proof of address (ID cards- Aadhar, driving license, insurance copy, maintenance bills)
- Proof of income
Top 10 Best Trading Accounts
IIFL- INDIA INFOLINE
- Trading account opening charges- Nil
- Trading charge per executed order- Rs.20
- Delivery charge- Rs.20
ICICI DIRECT
- Account opening charges INR 975
- The trading and delivery charges depend on the package you choose. It can range from 0.007%-0.050% and 0.07-0.55%, respectively.
Upstox
- Account opening charges- Nil
- Trading charges per executed order- rs.20
- Delivery charges- Rs.20
HDFC
- Account opening charges- INR 999
- The trading platform has a monthly subscription fee
- The trading and delivery charges depend on the package you choose. It can go to a minimum of rs.25 and Upto 0.05%-0.50%
(For both selling and trading) respectively
Kotak Securities
- Trading account opening charge- Rs.750
- Trading account AMC- Zero
- Zero brokerage for intraday trading only
Zerodha
- Account opening charge – Rs.200
- Trading charges- Rs.20 per executed order
- Delivery charges – 0
Angel one
- Trading account opening charges- nil
- Trading charges per executed order: Rs.20
- Delivery charges- 0
Sharekhan
- Account opening charge- nil
- Delivery charges- 0.50%
- Trading charges- start from 0.10%
Motilal Oswal
- Trading account opening charge- zero
- Delivery charges- 0.40%
- Free advisors available
5paisa
- Account opening charge- nil
- Trading AMC- Free
- Charge for per order for all segments- Rs.20, except for the delivery segment
FAQ’s
Q1. Can I open more than one Demat account?
Ans- absolutely! There is no restriction on the number of Demat accounts you wish to open in India.
Q2. Can I buy shares without a Demat account?
Ans- no! Without a Demat account, the SEBI (Securities and Exchange Board of India) does not allow anybody to trade shares/securities. Hence, it is mandatory to have a Demat account if you wish to get into the trading business.
Q3. what are the essential factors to consider while opening the Demat or reading account?
Ans
- The brokerage and AMC fee- there is an average fee maintained by most of the brokerage houses. You need to ensure the platform you choose does not charge a lot.
- The transaction and delivery fee- some platforms have a minimum transaction fee, making it more accessible. The fee can depend on the value of the security number of transactions, or the DP can have a fixed monthly fee.
- The User interface of the platform- having seamless transactions or being able to communicate with customer support at times of need is very important, but if the software you’ve downloaded doesn’t have a friendly user interface. It can cause a lot of problems & loss to the user.
- Look out for Equity and other segment fees/charge.
- Check the reviews of the platform or app before downloading- Before downloading any software, you must learn about the product or service you will use.
Conclusion
A Demat account provides a secure trading environment for investments related to equity. Everyone does not understand the complex operations of the equity market and the Demat account system. But Equity investing is quite rewarding, which draws a lot of investors. Hence, it is essential to understand your goals and needs and locate a service provider who can meet them. The demat platforms provide investors with the required information, support, and assistance to achieve their investment goals.
With accurate information, you can make your dream come true. The best way to earn and be riskless is to choose the perfect Demat platform. The tips mentioned above will help you find an ideal match. Stop waiting and start investing. Open your Demat account and earn lucrative rewards.