A Demat Account enables you to manage your trades and portfolio anytime and anywhere. While there is a lot of information on what a demat account means, there needs to be more information on various demat account charges. Before opening a Demat Account, you must know the nominal charges you will be paying.
Different types of Demat Account Charges
- Opening Charges: Before opening a dematerialization account with a broker, ensure they are registered with a Depository Participant. A DP is a brokerage firm that holds securities. The charges differ from broker to broker. Some offer to open a free demat account and then charge you subsequently in the following years. While some charge you a nominal amount at the opening itself. It will be best if you choose a broker that best meets your financial requirements.
- Maintenance Charges: Apart from the opening account charge, you will be paying the annual maintenance charge for your Demat Account. The AMC ranges between Rs 300-800, depending on your depository participant and the value of transactions you make in a year.
Here is the crux, if you are a small investor, you can waive the annual maintenance charge. As per SEBI, any investor with a balance of INR 50,000 or less is considered a small investor. It is also addressed as Basic Services Demat Account (BSDA).
- Transaction Charges: You will be charged a nominal transaction fee for every trade you take or a transaction you make. This fee varies from broker to broker, depending on the services provided. Every time security goes in or out of your demat account, meaning bought or sold, a transaction occurs, and you are charged a fee for the same. Some DPs charge a certain percentage of the transaction as a fee. While some have a fixed amount, like 15 or 20 rupees per transaction.
- Account Safety Charges: Before the online demat account and the whole wave of holding your securities electronically, traders and investors held paper-based security certificates. The added pressure of keeping these securities safe and damage free was mentally taxing. Nowadays, the DPs perform the job for you since all your securities are held electronically. For the safety of these securities, they charge you a small amount in the account of account safety charges. Like every other charge, these charges vary from broker to broker. However, they typically range from INR 0.50-1 for each ISIN.
What can you do to reduce the Demat Account Charges?
While there is no specific way to minimise any charges, you can take note of these minor things:
- Sign up with a broker that offers discounts or has the most nominal charges.
- Open a Basic Services Demat Account to waive the maintenance charges.
However, you must remember that if you plan to be a part of the financial markets in the long run, your focus should be on choosing a broker that meets your needs and provides value-added services, like Klevertrade.
A clear understanding of what is demat account means and the associated charges has allowed new-age traders and investors to focus on DIY Investing. DIY means Do It Yourself, enabling you to build and manage your portfolio without intervention. It is the perfect way to enhance your knowledge, gain control, and focus on your decision-making abilities. These days, brokerage firms provide multiple charts, analyses, and knowledge-gaining opportunities to make investing easier for users.