Category: Business
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blog details: The stock market is a good long-term investment option and can offer good returns.
You must have a Demat and trading account to invest in the stock market. The shares we buy are issued digitally. The advantage of this is that it no longer has to be handled in paper form, and since all your shares are in one place, it is easier to keep track of the accumulated expenses.
Let us now explain why a Demat and trading account is required. When we buy or sell shares, the transaction takes place in a Demat account and the funds in the trading account are used for that transaction. The average person doesn't know the difference between using an account and doesn't need one. When you open a Demat account, a trading account is also opened.
You need a bank account to transfer funds to a trading account. Which has to be linked to a trading account. Now 3-in-1 Demat accounts are also available. The advantage of combining Demat, trading and bank savings accounts is that you do not have to look at the fund balance in the trading account every time you buy shares. The money for the purchased shares (including brokerage) is taken from your savings account or after the sale of the shares, the money is credited to your savings account.
You must have a PAN card to open a Demat account. A Demat account has to be opened with a stockbroker. Your digital shares are secured with NSDL or CDSL, a Demat account from a broker is a way to buy and sell digital shares.
There are two main types of brokers. Service brokers and discount brokers.
The service broker gives you a relationship manager along with the software platform. He helps you buy/sell your shares when needed. If there is a problem with the shares or you have a question, it helps to solve it. It also helps you with financial planning, asset planning and portfolio management. But since it offers all these services, its brokerage discount is much higher than that of a broker.
The discount broker gives you a great software platform to buy/sell shares. It does not offer you services like a service broker. So their brokerage is low.
Both types of brokers are safe. Before opening an account, check whether the broker is SEBI registered or not.
If you have no experience in buying/selling shares in the stock market, it is better to open an account with a service broker. No matter how many Demat accounts you can open, they cannot be opened with a single broker.
The process of opening a Demat account has now become much easier. Most brokers offer online account openings. To open an account, PAN card, address proof, cancellation check, photo and account opening charges are required. Account opening charges are often waived.
The annual maintenance cost of the Demat account also has to be paid every year. It can range from around Rs 300 to Rs 900.
When opening a Demat account you have to give POA (Power of Attorney). Transaction + 2 days after the purchase of shares, is used to deposit it in your account.
Once the Demat account is opened you are given its login credentials. We can do all the following transactions like online shopping. This means logging in using Demat account login credentials. Search for the shares you want, enter how many shares you want, enter what you want at a price and submit an order. You get the price you want, the order is executed. This is called Limit Order. Sometimes when the price of a stock goes up, we want to buy the stock at the price we have, then we buy the stock at the price we have, it is called Market Order.
It is important to know the company when choosing shares for long term investment. It is important to look at the company's Balance Sheet, Profit & Loss, Sales Growth, Borrowings etc. You have to give it some time.
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