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Choosing Your Stock Broker !!

It’s scary to start Investing, I remember the day i started with a few thousand bucks, It felt like I am about to jump of the cliff. As soon as I bought the First Stock, i couldn’t stop staring at its price ticker for the next few days, constantly praying that it doesn’t fall and hoping that it rises miraculously, neither of that happened as the stock traded sideways for the next few days.



But for all this to begin, you need to have a Trading & Demat account. It is important to choose it carefully, because the brokerage and maintenance charges will eat into your profits. So let’s discuss the options available with you

3 in 1 Accounts

A combination of Savings, Trading & Demat Account offered by banks

Pros

  • Convenience of Fund transfer, as funds come in and go out from your savings account seamlessly and you don’t need to manually Transfer funds to your broker when you want to  buy a stock.

  • Single point of contact - You don’t need to visit an additional broker or visit a distant office, your neighbourhood branch handles everything from paperwork to customer service.

  • Door to Door service and on phone trading

  • Complete bouquet of investment products like Equities, Mutual Funds, IPOs, NFOs, Commodity, Currency, Derivatives etc

Cons

  • They charge extremely high brokerage on every trade.
  • High Annual Maintenance charges
  • They provide research tips or “recommendations” which is considered a positive factor by many, but in reality their research is absolute crap and is aimed at increasing your trading frequency so that they can earn more brokerage


Discount Brokers


  • These are internet only brokers which mostly have negligible or no physical presence
  • Pros
  • Extremely low or even Zero brokerage charge in some cases (Zerodha, Upstox etc. have zero brokerage on delivery trades)
  • Low Annual Maintenance Charges
  • They Don’t bug you with crappy research or spam promotional calls -Since they hardly charge any brokerage, they are not looking to make you trade more.
  • Extremely efficient and user friendly web interface & mobile apps since they are 100% dependent on these platforms
  • Easy paperless account opening with lesser hassles and faster processing

Cons


  • Web or mobile app is often the only medium to trade, Phone trading is charged at a premium and they lack physical presence. So not recommended for people who don’t use smartphones.
  • Do not offer the complete Bouquet of products. For instance, I can’t apply for IPOs from my Zerodha account
  • Fund transfer from your savings account can be time consuming or chargeable


Apart from these, there are those traditional brokers who neither provide the convenience of 3 in 1 accounts nor the affordability of Discount brokers. As such, they are not worth considering at all. Thus, you choice should be limited between the two categories mentioned above.

To open an account and start investing, visit Zerodha.

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