For those who want to open demat accounts, it is important to understand how they can maximize the benefits and minimize the costs associated with such accounts. But, let us first understand what is demat account?
It is the account that stores all your securities electronically in a dematerialised form. As all your securities are stored electronically in one place, you can trade in them from wherever you want.
Now, let us talk about how to make the best use of your demat accounts.
- Research your investments: Many brokers who allow you to open a demat account also provide a lot of research reports and insights on shares, bonds, and other securities. To access such reports, check the reports or insights tab on your demat account dashboard. Such insights can help you make an informed decision while trading.
- Use charts and other indicators: Often demat accounts provide analytical tools, like charts, which can help you understand market trends well. With the help of these tools, you can analyse the performance of a stock. You can even crunch historical data. Such technical analysis can help you enter into and exit from a position.
- Enforce discipline: As demat accounts offer you a lot of flexibility when buying and selling stocks, you may get carried away. Hence, to maximize the benefits of such accounts, you have to enforce strict discipline in terms of your trading. For this, you must set entry and exit points for your investments.
- Opt for a BDSA account if you are not an active trader: In case you are not an active trader, you do not need a regular demat account, which makes you pay a hefty fee in terms of annual maintenance charges, brokerage charges, etc. Instead, you can open a basic service demat account (BSDA), which is a low-cost demat account particularly meant for people who do not trade regularly. By using such an account, you can save a lot on demat account charges.
- Open an account with a discount broker if you do not need advisory services: If you can take your trading decisions on your own and do not require advise from your broker, then you do not have to open a demat account with a full-service broker. Such brokers make you pay a considerable fee but also provide you with a lot of research and insights that can help you make trading decisions. But, if you can make your decisions yourself, you can open demat account with a discount broker, who will not charge you much but will not provide investment-related advice, either.
- Open a free demat account: At times, some brokers allow you to open a free demat account. In other words, you do not have to pay account opening charges to them. Some of them even waive annual maintenance charges for a specific period. Therefore, you should always keep an eye on such offers to make the most of them.
- Keep your demat account safe: You can make the most of your demat account only if you keep it safe and secure. For this purpose, you should use a strong password. You should prefer having an alpha-numeric password with special characters. Then, you should also enable two-factor authentication. Even if someone ends up getting your password, two-factor authentication will ensure that he will not be able to access your account. If you are using a mobile app for trading, you should update it regularly because the latest version tends to have the best security measures.
Conclusion
Opening a demat account is not difficult. But, it needs discipline to maximize its benefits and minimize its costs. It also requires you to read a lot and keep a track of developments in the field of investments.
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