Do you want to start investing in the securities market? Would you like to enjoy higher returns by investing in stocks, ETFs, or mutual funds? Well, your first step to fulfil this dream is by opening a brokerage account. This account can help you build your financial security and invest for long-term purposes.
Read this blog to understand what is brokerage account and its benefits in trading securities. It will guide you in choosing the best brokerage platform and open an account.
Understanding a Brokerage Account
A brokerage account is an account you can open to buy or sell securities from the stock exchange. Using a brokerage account, you can invest in bonds, mutual funds, and ETFs. While investing in the securities market, you must take the help of a depository participant (DP), who facilitates your interaction with the stock market.
A brokerage account makes this process easier by allowing you to add funds so you can buy and sell securities directly from the platform. It also grants access to financial markets, numerous investment products, and effective research tools. Some also offer margin trading, which allows you to get additional investment funds.
You can easily open a brokerage account online and add funds to the account before making any purchases. You need to transfer the money from your bank account to that brokerage account.
Function of a Brokerage Account
Moving from the brokerage account meaning, you must know how a brokerage account works. First, you must choose a reputed brokerage firm and apply to open an account. The broker is an intermediary between you and the securities you want to buy. You may deposit funds and start trading once your account is ready.
For trading securities, you can place a buy or sell order using the brokerage firm’s trading platform. The broker will execute your buy or sell order by charging a fee. There are no restrictions regarding the maximum number of brokerage accounts you must have and how much you may invest using a brokerage account.
What are the Different Types of Brokerage Accounts?
A brokerage platform allows you to buy or sell securities through a single platform. Now you must get familiar with different types of brokerage accounts. Below are the different types of brokerage accounts:
-
Discount Brokerage Accounts
A discount brokerage account allows investors to trade securities through online platforms independently. Since it includes self-directed trading, a discount brokerage account charges lower fees and commissions. These accounts mainly operate through online platforms and allow investors to trade without offering personalised advice. Cost-conscious investors prioritising cost-effectiveness use this account and get fewer services than a full-service brokerage account.
-
Full-Service Brokerage Accounts
Investors who are seeking a brokerage platform offering services like a financial advisor can choose a full-service brokerage account. These brokerage platforms are paid to assist their clients in making investment plans, tracking investments, and performing trades.
Along with trading, these platforms provide personalised advice to investors requiring tailored investment guidance. Since they offer expertise and support to investors, full-service brokerage accounts charge higher fees and include minimum balance requirements.
-
Robo-Advisor Accounts
The Robo-advisor brokerage accounts are online platforms that use algorithms and provide automated investment advice to their clients. These accounts include a low-cost and hassle-free investment procedure. They are also beneficial for investors who have just started investing.
The robo-advisor accounts use tools to create and manage a diversified portfolio based on clients’ preferences. These accounts charge an annual commission of 0.25% of assets under management.
Benefits of a Brokerage Account
From getting financial advice to trading securities, a brokerage account provides numerous benefits to an investor. Below are some of the benefits that you can get from opening a brokerage account:
- You can invest as low as possible using a brokerage account as there is no contribution limit.
- A brokerage account also provides advisory services and security trading.
- Online brokerage platforms charge a minimum fee for investors who like to conduct research and trades without advice.
Step-by-Step Procedure to Open a Brokerage Account
You can download the Torus Digital application and open a brokerage account to start your investment journey. You do not have to pay any annual maintenance charges using its account. Here is a step-by-step guide that you can follow to open a brokerage account with Torus Digital in just a few minutes:
Step 1: Log in to the Torus Digital application using your mobile number and accept the ‘Terms & conditions’. Enter the OTP you received on your mobile number and click ‘Continue’. Enter your email ID and the OTP sent on your email ID. Now set a four-digit mPIN for convenient access to the app.
Step 2: You need to provide your marital status, annual income details and income source. Before proceeding, declare and confirm your Indian citizenship.
Step 3: Verify your Aadhaar and PAN by giving permission to the application to fetch your documents from Digilocker.
Step 4: If you choose your Aadhaar number, a 6-digit OTP will be sent to your mobile number or email ID that has been linked with your Aadhaar. Enter the OTP and click on ‘Submit’ to proceed.
Step 5: Enter the four digit-mPIN you have set for the application. You can also click Forgot PIN to get a new one in case you have forgotten it. Provide access to fetch your Aadhaar and PAN and then select ‘Allow’.
Step 6: To link your bank account, choose UPI from the list of apps. Select the bank account that you want to link to the brokerage account. Now enter the bank details including bank name, IFSC code, and account number.
Step 7: You have to upload your photo using your selfie camera. You must also provide a digital signature on a white screen of the application.
Step 8: Select nominees up to three persons and do not forget to provide the details of guardians if there is a minor nominee.
Step 9: The final step of opening a brokerage account with Torus Digital is providing an e-sign using your Aadhaar through the NSDL website.
Your brokerage account with Torus Digital will be activated within the next 24 to 48 working hours.
How to Find the Best Brokerage?
Follow these basic criteria before choosing a brokerage platform:
- Ensure you have selected a well-reputed online broker that has positive customer reviews.
- Compare and contrast the fee structure of different brokerage providers. Torus Digital allows you to open a brokerage account for free. You can execute trades with just ₹11 with this platform. While using the Torus Digital application, you do not have to pay the annual maintenance charge (AMC).
- You must seek a user-friendly trading platform that consists of real-time data.
- Make sure the brokerage platform includes customer support services for you.
Charges of Using a Brokerage Account
Every brokerage account charges a fee to manage investment accounts and facilitate trading. Torus Digital charges a very minimum fee compared to other stockbrokers. For instance, Torus Digital charges a total DP charge of ₹11+GST per scrip when you sell shares from your Demat account, where depository CDSL gets ₹5.5 and Torus Financial Markets Private Limited keeps the remaining ₹5.5. In addition, Torus Digital charges only ₹30 for each Demat request form and an extra ₹5 for each extra certificate.
Final Thought
Opening a brokerage account is essential for investors since it is the first step if you buy a stock or invest in a mutual fund. A broker is an intermediary platform between you and the securities that you trade. You must compare the brokerage charges and features between different brokerage platforms before choosing one.
So, wait no more! Download the Torus Digital application and open a Demat account for free.
