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Share Market December 22, 2017

Investing in Shares – Getting Started

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Also read: Are fixed deposit your safest bet

This may be the best time for you to decide on shifting from traditional investment instruments to placing your funds in the stock market. Not only Indian bourses, exchanges across Asia are returning handsome money to investors. The icing on the cake for investors in India’s NSE or BSE is the recent upgrade of India’s sovereign rating by Moody’s owing to the reformist stance of the present government. To fetch gains from this ongoing festivity, it is time for you to get a demat and trading account. But how?

Demat account is not normal saving bank account and has to be opened with a Depository Participant (DP). Alongside a few non-banking companies like Edelweiss Broking Services and Motilal Oswal Investment Services, many private and public-sector banks have made a foray into DP and brokerage services; hence a demat and trading account can be opened with any of them, the point to note is the difference betweenannual charges for maintaining demat account and the brokerage on transactions you execute through your trading account.

Indeed, one needs a PAN (Permanent Account Number) to open a demat account. Also, most DPs, for instance, investment arms of banking companies, insist on having a savings bank account with the same entity so that transfer of money to and fro savings and the trading account is hassle-free.

Individual investors can leave it to their DPs as to which depositary participant, NSDL or CDSL, will eventually hold their shares under a unique identity number. The tech-savvy generation of today can study trading tips and guidelines of their service provider on how to trade shares through the online trading platform. This will relieve you of the burden of making a call or sending a text message to your stock broker, who initiates the buy/ sell action on your behalf,atevery single instance of buying/ selling a stock.

Most services are available online with the facility to get demat, and a trading account opened via websites of DPs. A hard copy of your contract, however, in addition to self-attested copies of your documents while opening account, may still have to be executed. Completely paperless account opening is also enabled through Aadhaar.The regulator, Securities and Exchange Board of India, commonly dubbed as SEBI, insists investors must perform due diligence ahead of opening account and trading securities as the market works on investors’ sentiments at any given point in time, high returns cannot be guaranteed by any intermediary.

Having your account ready isn’t enough to make profits in the already matured stock markets of today where millions of investors, domestic as well as foreign, are eying better returns than from traditional savings like bank deposits. Rather than relying too much on tips and market analysis provided by brokers and other channels (which at timescan be biased orsuperficial), it is advisable to rely on real performancecredentialof companies you have invested in or wish to invest in. Being informed of latest news like any change in management or formation of Joint Venture that can add value will take you a long way in the so-called ‘dalal street.’

If you do not have one, apply for your demat account today to benefit from the ongoing bonanza.

Also read: Why Mutual Funds, And Which One

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One response to “Investing in Shares – Getting Started”

  1. Paras Singhal says:

    Please suggest with whom should I open my demat account?

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