In simple terms, a Demat account helps an investor buy and sell shares in a secure and safe way over the internet. He does not have to make repeated trips to the stock market. All owned shares are held electronically in the account. In case of a merger, bonus or consolidation, the shares are automatically credited into the account. The depositor participant also provides a periodic statement of holdings and transactions. Hence, you can identify the number of shares held and can review the performance of your stocks. Demat accounts also help investors hold both debt and equity investments in a single account. An investor need not open various accounts to hold different financial investments. They can all be consolidated into a single account.
There are different types of Demat accounts available in the market. Before you decide to choose a Demat Account offered by any broker or finance firm, here are a few things to check:
The cost of opening a demat account at Angel Broking is nil. The annual maintenance charge is as per the account type. Angel broking has various account types—Angel Classic, Angel Preferred, Angel Premier and Angel Elite.
a) The Angel Classic account is from a beginner's point of view. An investor has to pay Rs. 10,000 in the beginning, which will be used by the investor for trading. The brokerage charge for online equity trading is 0.32% and offline equity trading is 0.40%. Similarly, the brokerage cost for equity intraday trade/futures is 0.032% for online trading and 0.04% for offline trading.
b) In an Angel Preferred account, an investor has to pay a minimum amount of Rs. 25,000. Brokerage cost is 0.224% for online and 0.280% for offline trade in equity.
c) In an Angel Premier account, customers pay a low brokerage of0.176% through online equity delivery and 0.0176% for intraday trading. The initial starting amount is high IE. Rs. 50,000 to Rs. 99,999.
d) Investors investing in Angel Elite account pay the least brokerage as their initial amount is high, i.e. 1 lakh and above.
Usually, it takes about a week or two to open a Demat account. The processing time depends on the verification of details provided in the Account Opening form.
Details on the Account Opening form have to be verified by the depository participant (DP). Once the application is processed, you will receive a welcome kit with details of the account number and password. You can access your account using these details and begin trading in the stock market. Such an account can be opened with no minimum balance as well as no balance of shares. Remember, you cannot trade in the stock market without a Demat account.
The main criterion for selecting a Demat account is the frequency of usage, i.e. how frequently are shares traded. Another criterion for selection of such an account is the transaction style. Brokers charge according to transaction styles. In intraday transaction, the brokerage is low in comparison to delivery. Also, select an account where the transaction charge, annual fee and other charges are minimal. Choose a broking service based on the quality of information and the ease of transacting through the trading platform or website. A good website facilitates better trading in terms of better loading time, easy interactivity, site navigability, etc. The site should also have features to create a watch list of good performing stocks, should provide information of the history of the company, real-time prices of shares, etc.