If you want to invest in the stock market, the first thing you should do is get a demat account opened. Before you do so, you need to consider multiple factors, which are associated with the costs and convenience of opening a demat account.

But the first thing you should know is the meaning of a demat account. More importantly, what does “demat” mean? The term “demat” is the short form of “dematerialisation.” Before the advent of demat accounts, people used to own stock-related investments in the form of a paper certificate, which were cumbersome to deal in. Therefore, demat accounts were introduced.

As a result, investors can hold their investments in an electronic format and buy and sell from anywhere in the world. All they need is a computer and internet connectivity. Having understood a demat account’s meaning, let us talk about the factors to keep in mind before opening a demat account.

Factors To Keep In Mind Before Opening A Demat Account.

1. Costs associated with a demat account

There are many costs when it comes to a demat account, including account opening fees, brokerage fees, and annual maintenance fees. Some brokers open demat account for free, while others charge an account opening fee. It is a good idea to compare account opening fees across brokers to make an assessment. 

Then, a brokerage fee is levied on the purchase and sale of securities. Some brokers charge fixed brokerage fees, while others charge a brokerage fee based on the value of the transaction. Always ensure that the fee charged is in line with the services provided by a broker. 

Then comes the annual maintenance fees, which vary from broker to broker. At times, brokers offer discounts or waivers, which can reduce the annual maintenance fees. So, always watch out for that.

2. Quality of the trading platform

Before you open a demat account, you need to know how good a broker’s trading platform is. This means the software tool the broker will provide you to buy or sell securities online. 

Such tools typically offer many features, like charts and statistics, which can provide you with insights. At times, a trading platform is convenient to trade on. 

But, there are trading platforms, which are too cumbersome even for a seasoned investor. So, do ask the sales team of a broker to give you a demo before opening a demat account. In case you forget that, do ask them to give you a demo before getting a demat account no. allotted.

3. Standard of customer-care

Even if you are a seasoned investor, you may need to speak to the customer care of your broker once in a while. However, if you are a newbie, you may need to get in touch with the customer care team regularly. 

Therefore, you need to ensure that the customer care team of your broker is professional. They need to understand your concerns and provide solutions patiently. 

At times, the customer care team may call you to advise you to trade in a stock or buy a unit of a mutual fund. Be extremely careful of such practices because those who make such calls are more concerned about selling their products than giving you the right advise. 

For this purpose, the customer care team does not include only those whom you can reach out to by using your phone, but it also includes the staff at the nearby branch of the broker whom you may like to go and meet in person.

4. Hassle-free broking, banking, and custody

Seamless broking, banking, and custody is the hallmark of efficient brokerage service. You should be able to transfer funds to and from your demat account easily through RTGS, NEFT, UPI, etc. 

You should then be able to pay for the broker’s service and get custody of your securities easily. In case your broker is not able to provide these services efficiently, you may have to bear considerable cost and inconvenience. 

Imagine not being able to transfer funds to your demat account. You certainly do not want that. So, if you face a major issue with these things, change your broker straightaway.

5. Investment options and research support

Today, investors have several options to invest in. Therefore, you need to ensure that your broker allows you to invest in stocks, mutual funds, bonds, exchange-traded funds (ETFs), etc. 

The point is your investment options should not be limited because your broker’s trading platform does not allow you to make certain investments. So before opening a demat account and getting a demat account no. allotted, always ask the sales team about it. 

Besides, you should check the kind of research support a broker provides. Many brokers provide in-depth reports on stocks and industries free of cost. So, check on this aspect, too.