Choosing the right share broker is a tedious task and can be more complicated than it sounds. The perfect share broker can open up new and exciting investment opportunities, but an inefficient one can limit your options and could lead a surge in your costs.
For a beginner, it is extremely tough to select the right share broker in India for him at first.
Only after comprehensive research of Indian Stock Market, can one select a right share broker in India.
How can a beginner invest in Indian Stock Market?
Firstly, decide where you want to invest. If you plan to invest in the Indian Stock Market, you can have plenty of share brokers in India to choose from, but Best Online Share Broker in India can help you reap the right benefits!
Secondly, check costs carefully. Many investors singularly focus myopically on dealing commissions. But share brokers in India levy a broad option of costs.
One needs to decide what one wants from his/her share broker. Share brokers in India fall into three types: Execution-only/ discount brokers only carry out your trading instructions, either by phone or online. Advisory/ full-service brokers will first discuss your portfolio and investment ideas with the interest first, and then enable them to make the final decision based on realistic advice.
Thirdly, one also needs to plan how to invest. Share Broker in India usually requires high-speed online access and relatively lesser commissions, while some infrequent investors may be happy to deal via telephone and not worry so much about costs.
Fourthly, one needs to understand how one's share broker functions. An organization that is willing to both buy and sell a share, constantly quotes a cost to do either. Share market makers only specifically trade with institutions and share brokers, not always directly with the public.
This depends on certain factors. For instance, depending on how a share broker's firm is set up, this could include direct trading with the market maker. Or it could simply mean that they trade through another local share broker, who in turn, trades with the market maker.
The one concept that is gaining popularity in Indian Stock Market today is the creation of a Demat account.
So what exactly is a demat account?
A demat account simply refers to refers to a dematerialized account. Similar to your savings bank account, one only needs to open an account with a bank to save one's money, make cheque payments etc. In the same manner, one can opt for a demat account if one wants to buy or sell stocks. So, in a sense, it is just like a bank account where the real money is replaced by shares instead.
A 'dematerialized' account holds shares in a convenient electronic form, saving you the trouble of holding shares in paper form. Possessing a 'demat' account is now a prerequisite for investing in Indian Stock Market.
So, while one's bank account can keep one's money safe and transfer it easily across all accounts, a 'demat' account can keep one's shares safe and transfer it to the next owner when one sells it.
Demat services are usually provided by financial institutions and share brokers in India. The broker houses in such cases also act as depository participants, intermediating between the depositories and the investor. To open a demat account, one needs to submit an application to a depository participant and submit the required documents. Once one has a demat account to one's name, one can have a trading account with a share broker of your choice.
So, all the shares bought and sold will be reflected in one's demat account. Any previously held physical share can now also be dematerialized and consequently be transferred to the account.