If you ask your parents or an older person, who used to trade or invest in the stock market about brokerage charges, will they want to know the commission rate with your broker? In recent times, this scenario has changed with many low brokerage charges Demat, and trading accounts.
This article will cover low brokerage Demat accounts, their benefits, how they are different from traditional Demat accounts, and more.
What is a Low Brokerage Demat Account?
Low brokerage Demat accounts are Demat accounts on which brokerage charges are fixed at a low amount. If you have noticed, most of the discount brokerage houses charge between Rs. 0 to Rs. 20 per order irrespective of the volume of the trade.
This is known as a low brokerage Demat account. Here the amount of brokerage you will be paying for each trade is already decided. Whether you trade securities worth Rs. 10 lakhs or Rs. 10000, the brokerage charges that the broker will levy on the order is the fixed amount.
Low brokerage Demat accounts have become popular because of their unbeatable low trading account charges.
Have you ever thought that you can trade for free, that is, without paying any brokerage charges? No, isn’t it? However, these low brokerage Demat accounts have made that possible as well. Most of these low brokerage trading houses charge no brokerage for delivery trades and allow traders to take delivery of shares for free, isn’t that great?
How are They Different from Traditional Demat Accounts?
Earlier brokerage houses used to charge commission on trades which they still do, but a number of those brokers are coming down. Even full-service brokerage houses are now coming up with low brokerage trading account plans.
Commission-based brokerage charges were variable and used to depend on the volume/ amount of the trade. Suppose a brokerage house charges 0.50% on delivery trades. Now you traded securities worth Rs. 1 lakh and took the delivery of the same. So, the brokerage charge you would be paying is Rs. 500. Now, if you trade securities worth Rs. 2 lakhs and take delivery, the brokerage charges will go up to Rs. 1000.
However, with low brokerage Demat accounts, you have to pay a fixed amount only. Suppose you traded the securities worth Rs. 2 lakhs and took delivery of the same, and your low brokerage trading account charges for delivery trades is Rs. 10 per order. So, for the entire transaction of Rs. 2 lakhs, you just have to pay a brokerage of Rs. 10. Can you see the difference between the two brokerage charges?
Low brokerage Demat accounts can bring down the brokerage charges exceptionally low and benefit the traders. These brokerage houses are best for traders who trade in bulk and actively.
Benefits of Low Brokerage Demat Account
There are ample benefits of a low brokerage Demat account, and some of the most important ones are –
- You pay brokerage charges which range from Rs. 0 to Rs. 20 per order. You can trade any volume and pay the same low brokerage.
- There are often no Demat account opening charges as well for these accounts. Moreover, often maintenance charges are also not levied, or very nominal AMC is there.
- The account opening process is simple, and you can do it online within a few minutes.
- You get highly advanced trading platforms.
- A lot of trading and fundamental resources you can avail yourself of as well.
How Can You Open a Low brokerage Demat Account?
For opening a low brokerage Demat account, you need to:–
- Open the brokerage house’s website.
- Click on the open a Demat account tab.
- Fill in the form with your details.
- Submit it after thoroughly checking that all details are right.
- Then upload all the documents – PAN, AADHAAR, Bank details, Income Proof, and other documents as required.
- Wait for the approval from the broker, and once they approve your application for opening the account, you will get the user ID and password for your account at your registered email address
- Now you can start trading paying the lowest brokerage charges.
Brokerage charges are inevitable while trading or investing in stocks or other assets in the market. However, the lower it is, the more will be your profit. With low brokerage Demat accounts, you can lower the brokerage charges significantly and increase your profit margin.