Have you decided to start investing or trading in the stock market? If yes, congratulations on taking a step toward financial freedom! However, before you can start buying and selling stocks, you need to open a Demat account with a stockbroker.
A demat account allows you to hold shares and securities electronically. This means that you don’t have to worry about storing physical certificates as they are stored digitally. Opening a Demat account with a stockbroker is not a complicated process, but there are some costs involved.
The question is what are these costs and how much money will you need to open a Demat account? Are there any other charges if you opt to open free Demat account? Keep reading to find your answers.
How much money is required to open a Demat account with a broker?
The money required for opening a Demat account differs from broker to broker. Typically, the fee ranges from Rs. 500 to Rs. 1,000. However, recently, many brokers have also started to offer zero opening charges for Demat accounts.
While these charges differ from broker to broker, they are usually a small price to pay for the benefits you receive with a Demat account. Here are the major heads of charges associated with opening and operating a Demat account.
- Account Opening Charges
To open a Demat account, you need an association with a registered depository participant (DP). A DP is a bank or brokerage fund that is allowed to store securities. These platforms enable you to open a Demat account with them at nominal charges. Dhan enables traders to open a Demat account free of cost.
- Annual Maintenance Charges
Most stock broking platforms charge annually for the maintenance of the accounts. This amount usually depends on your DP and the number of transactions you make in that particular year. The charges range anywhere between Rs 300-800. With Dhan, you do not have to worry about any maintenance charges.
- Account Safety Charges
Before the era of Demat accounts, the burden of storing and protecting the purchased shares fell on the trader. However, now DPs take the responsibility of holding your securities for you. Thus, a small monthly fee is charged by some DPs for the safety of your securities.
- Transaction Charges
In addition to the aforementioned expenses, you must pay transaction charges every time you sell or purchase shares using your Demat account. This amount depends on the stock broking platform you use. Dhan charges a nominal Rs 12.50 per instruction per International Securities Identification Number (ISIN) and GST.
By keeping track of associated charges, you can take relevant steps to reduce your expense on share trading. Signing up with a brokerage platform that offers discounts on opening and operating a Demat account may be a good starting point.
Conclusion
Opening a Demat account is an easy task that does not require much money. You can also choose to open a free Demat account with reputed SEBI-registered trading platforms like Dhan.
