After writing some posts on how to invest, what will be asset allocation? etc, it is the time to know how you can invest in the equity market. There are two ways by which you can invest in the equity market. One is equity mutual fund and another is directly trading of stocks. Those who are busy in daily life and find difficulties to do the regular tracking of stock market; they can invest in equity through mutual fund. Hope everybody knows The basics of mutual fund and How to start mutual fund online.
Some of the young investors also prefer to invest in the mutual fund as because they are not ready to take up the challenge by themselves by simply saying that it is too complicated or boring. I have also seen some persons in my life who are quite well with the direct investment in the equity market. So, to start investing in equity market, you have to first open a Demat and Trading account.
What is Demat and Trading Account?
A Dematerialized account or in short Demat account is the account where shares and securities are held electronically and investors does not have the physical possession of the share & security certificates. Demat account enables the brokers to settle the balance faster. It also reduces the risk of mishandling, stealing of certificates etc. and thus add value to the investor’s service. Demat account has annual maintenance charge (AMC) also.
A Trading account is the account by which you can trade stocks in the stock market. This account is linked with Demat account and savings bank account for transaction of shares and money. Through trading account you can trade mutual fund also. Trading account does not have any AMC like Demat account. The brokerage is applicable for trading account and it depends on the volume of the stock trading.
Full Service Broker Vs Discount Broker
Full service brokers are giving advisory services along with the trading facility. Some of the full service brokers are ICICI Direct, AXIS Direct, SBI Caps, Sharekhan, Edelweiss etc. As the advisory service is given with trading services, the brokerages are high. It ranges between 3% to 5% of the trading value.
They have offices in every nook and corner of the city. They also have sales persons for door step services like open an account and dedicated relationship manager to guide you according to your need and risk taking capability. But, sometimes it may happen that the relationship managers are misguiding you with the wrong or suppressed information which may harm your entire portfolio.
With the advent of internet and technology, new idea of discount brokerage has come to the market. As this age of open information, anybody can do their own home work for any company or any stock. They may not need any professional service to choose any stock for trading.
So, the discount brokers are giving only trading service without any advisory service. As there is no advisory service in this case, the discount broker charges very less, even nil in some cases for delivery trading. Some of the discount brokers are Zerodha, RKSV,Tradezini etc.
|Description||Full Service Broker|
|Interaction||Face to face interaction possible as they have many offices||Such face to face interaction not possible as they don’t have many offices in each and every city|
|Brokerage||3%-5% of trading value||NIL for Delivery and Minimal charges (Min of Rs 20 and 0.01% of traded value) for Intraday.|
|Who should choose||Those who don’t have personal advisor or not able to analyze on his or her own|
Those who have personal advisor or DIY (Do it Yourself) approach
Why you should choose discount broker?
I have already listed some differences between full service broker and discount broker. Those who don’t believe others and want to take the money making decisions by themselves, they can consider discount brokerage account. It also helps you to avoid the risk of accepting biased report and slowly it will give you more confidence about stock trading.
Among the discount brokerage accounts Zerodha has great user interface and handy analysis tools. It has kite platform which is very easy to trade and it requires very less time. They have also different type of analytics like Time analytics, Holding Analytics etc.
Here is a screen shot of Kite platform, how it looks.
Time analytics shows the maximum profit and minimum profit in a given time period. It also shows you, how much time your portfolio is profitable and how much time it is not profitable. Holding analytics shows the pie chart of allocated stocks in the portfolio. With the help of these analytics tool, you can easily analyze and set your strategy for trading.
There is Zerodha Pulse which shows you the market news in very attractive way by which you will be staying updated about the market and decide accordingly.
Moreover, its brokerage is free for delivery trading. For delivery trading you need to pay only Securities Transaction Tax (STT) and Stamp Duty. Please check the brokerage calculator for finding out the brokerage charges in different aspects.
Now, if you feel it is worth to have an account with Zerodha, you can open a Zerodha Demat and Trading account instantly by clicking here.
Apart from above, there are other advantages also to open an account in Zerodha. Few days before Zerodha have introduced the platform for investing in Mutual Fund. The other discount brokerages don’t have this facility. If you want to invest in a mutual fund without brokerage cost, execution cost, you can invest in the direct mutual fund through Zerodha Coin platform. You can open a SIP without any ECS in just one click.
Zerodha Varsity is the den of information about the stock market, its rules, regulations, behavior, technical & fundamental analysis etc.
It also enables you to track the entire portfolio with switch, redeem facility. It will generate consolidate tax report statement by which you can file the return without doing the tedious capital tax gain calculation.
To open a Demat and Trading account in Zerodha instantly for free, click here
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