Choosing a suitable demat account from the wide varieties of choices available in the market is a great challenge on its own. Some of the people out there do not even know how to open demat account online. Though most of the demat accounts are similar to each other, the facilities associated with the account and the level of service offered by the firm makes the difference between a great choice and a poor choice when it comes to demat accounts.
These facts are not disclosed to the people when they approach the firms to know how to open demat account. Considering the importance of demat accounts in the field of stock trading where each second matters, it is better to research all demat accounts before deciding on your account. The prices of stocks change frequently, and there should not be a situation in which you lose a golden opportunity just because you couldn’t buy stocks in time due to your demat account. The prospective young investors generally make mistakes due to their limited experience in the field that could really add to their troubles in the future.
The basic mistakes that are generally seen are:
- Inability to understand what a demat account is.
Most of the beginners only have a basic knowledge of what a demat account is and in some cases they don’t even know the purpose of the demat account. A demat account or a dematerialized account is used to store securities like bonds, shares and mutual funds in a digital form and is provided by NSDL or CDSL. These accounts are generally used with trading accounts for buying and selling stocks and a pre-requisite for online trading activities.
- Choosing “Free ”
There are several firms which offer so-called “free accounts.” Generally, people with no formal knowledge about demat accounts and are new to the field often gravitate towards it. Most of the firms have advertisements of such “free accounts” on their websites which is visible to the persons who search to know how to open demat account. In reality, these accounts are not “free.” They generally contain hidden charges like annual charges and high brokerage rates that are not disclosed to the person while opening the account.
- Choose demat accounts solely on brokerage alone
People often choose demat accounts based on brokerage alone. This is a big mistake. Low brokerage does not always mean the right choice as they may not include trading account facility or software and technical support that is provided by other firms. Furthermore, these accounts might not have good customer support, and this could mean that you will lose good opportunities to make money due to poor service by the firm.
- Check the authenticity of the firm
There are a lot of bogus websites and firms that offer demat accounts, and there are also firms that are suspected of fraudulent activities. It is good to avoid these firms to ensure the safety of your account.
- Customer Service
It is better to opt for firms that give the best customer support. Always check customer reviews and feedbacks before choosing the demat account. Customer satisfaction is a clear indication of the reputation and quality of the service provided by the company.