Choosing an online stock broker is one of the most important decisions you’ll make when you begin your investment journey. In India, you can’t begin investing or trading in stocks unless you have a stockbroker (unless you’re borrowing someone else’s account). These stockbrokers provide Demat and trading accounts, which are required by investors to purchase and sell equities.
I had no one to help me when I first started my brokerage account. I come from a family where no one buys stocks. My father owns a few mutual funds (paper certificates) and life insurance companies (LICs). He, on the other hand, never had an online stock brokerage account and never invested in the stock market directly. As a result, I had to research a lot of websites to learn where to begin and how to find a stockbroker in India.
That is why I am creating this post for novices so that they do not have to go through all of those difficulties and may save a significant amount of time. For the convenience of the readers, I’ll also recommend the three top stockbrokers in India for beginners. Let’s get this party started.
Advice on How to Choose a Stockbroker
First and foremost, I’d want to point out that your first broker does not have to remain your stockbroker for the rest of your life. You have complete freedom to change brokers at any moment. Additionally, you can move your existing shares from one brokerage account to another. I went from ICICI Direct to Zerodha as a broker.
Switching brokers, on the other hand, is not suggested because it requires some headaches and consumes time unnecessarily. Why not deal with the best stockbroker and avoid having to move accounts later? Furthermore, it is advisable, to begin with, a suitable broker, as choosing a lousy stockbroker could sabotage your first experience with investing/trading. Furthermore, if you switch brokers, it may cost you some money in switching expenses.
Then, with your stock broker, you’ll need to open Demat and Trading Accounts (2-in-1 accounts). Most brokers provide both of these accounts. To invest or trade-in stocks in India, you’ll need one of these accounts.
Before we get started, let me give you a quick rundown of the differences between Demat and trading accounts so we can all be on the same page.
Similar to how money is held in a savings account, your purchased stocks are kept in a Demat account. Your Demat account is credited when you buy a stock. When you sell it, the amount is deducted from the account. Your Demat account displays all of your holding stocks at any given time. A Demat account is a short form for a ‘Dematerialised account,’ by the way.
A trading account, on the other hand, is a way to purchase and sell stock on a stock market. It is used to put market purchase or sell orders for a stock.
What Should You Look for in a Stockbroker?
To choose a stockbroker in India, you must first conduct some research about the stockbrokers. Make your independent investigation. Pay attention to what experienced investors have to say about which stockbroker they use, but don’t take their advice at face value. It’s possible that their needs aren’t the same as yours. You are free to conduct your study. Get a general concept of the stockbroker, such as account opening fees, services provided, trading apps/websites, and so on.
After that, you must consider a lot of things before selecting a stockbroker. Here are a few things to look for while selecting a stockbroker in India:
1. The broker’s background and reputation
The first step is to look into the stockbroker’s background and repute. What is the age of the brokers, as well as what their customers have to say about their platforms? You can read customer reviews, concerns, and take a survey about their personal experiences. Check the mobile app ratings on Google or the App Store if you’re intending to utilize them to make investments.
Another way to assess a broker’s reputation is to look at how large they are based on their total number of active clients. The trading platform of a larger stockbroker will be more stable.
2. Fees for Brokerage and Other Important Fees
Stockbrokers are registered members of the stock exchange who help their clients place to buy and sell orders in the stock market. Brokerage fees are a commission that they charge for providing this service.
In India, there are two sorts of stockbrokers: A full-service broker and a discount broker are the two types of brokers.
Along with the trading platform, a full-service broker offers advisory services and other premium features. These brokers demand large commissions as a proportion of each trade they execute for their clients. Discount brokers, on the other hand, simply offer trading services. They charge a fixed price for each transaction and offer cheap brokerage.
Select a suitable broker based on your preferences. Go with a full-service broker if you want stock research advice, research reports, and other tailored services. Choose a discount broker if you plan to invest or trade on your own and want to save money on brokerage.
3. Brokerage fees for various brokers:
Full-service brokers: 0.3-0.5 percent of delivery turnover | 0.1-0.275 percent of intraday turnover Discount brokers: 0.3-0.5 percent of delivery turnover For delivery trades, it’s free | For all other trades, it’s a flat Rs 10 or 20.
Most investors and traders nowadays favor discount brokers (such as Zerodha, Upstox, Angel Broking, and others) because it saves them thousands of rupees in brokerage fees. Furthermore, several bargain brokerage firms have begun to provide superior features to their clients at no extra charge.
4. Customer Support
Unless you already have a mentor or advisor, you will require some customer service if you are new to investing/trading. Examine the stockbroker’s level of client service.
Investing using online platforms is simple to do and has a wealth of tools available. However, there may be occasions when you require technical assistance. It’s helpful to have someone to look for in these situations. Customer service should not be avoided. Before choosing a stockbroker, read the reviews and if the customer service is poor, look for another broker.
Calling their customer service hotline number is an easy way to get in touch with them. Avoid that brokerage if the customer executive takes years to pick up the phone. Furthermore, if you prefer one-on-one client care, visit the stockbroker’s website to see if they offer personalized services. In addition, you may see if there are any Investors Education efforts or archives of difficulties that you can check over if you get stuck somewhere.
5. Available Trading Platforms
This is one of the most crucial aspects to consider. Examine whether the trading platform is user-friendly, has a good user interface, is fast, and is simple to use. On YouTube, you can see demo videos of the trading platform. Additionally, see the app’s reviews on the Google and iOS platforms.
When it comes to picking a stockbroker, the trading platform is the most important consideration, with all other considerations being secondary. This is because you will spend a significant amount of time on the trading interface solely to place your buy/sell orders. It will be a lot of trouble for you if you aren’t familiar with the platform.
6. Advisory and Research Centers
Check for the facility if you aren’t preparing to invest on your own and require an advisory/research report.
It’s also a good idea to double-check the advisory’s credibility. In advisory and research work, the stockbroker should have a strong reputation. Many of India’s top stockbrokers, such as Angel Broking, ICICI Direct, Motilal Oswal, Sharekhan, and others, provide research reports and advisory services.
7. The Types of Services Provided
If you want to invest and trade in a variety of ways, seek a stockbroker who can provide you with all of them. If you want to trade stocks, derivatives (futures and options), currencies, commodities, and so on, look for a broker that allows you to trade all of them, not just one.
Similarly, if you intend to invest in other alternatives such as mutual funds, bonds, or other securities, see if that broker offers that range of services. Most major brokers now provide services in a variety of investments and trading instruments.
8. Range of Facilities Offered
When it comes to investing and trading, there should be no or minimal hidden fees. All fees incurred during transactions should be listed separately. Before choosing a stockbroker, inquire about any hidden fees with your customer service representative. You can also check the stockbroker’s pricing and charges section to learn about all of the fees that clients must pay.
On their websites, most stockbrokers now include brokerage calculators. Remember that any service relies on transparency.
9. Transfer of funds
It should be possible to link your trading account to your savings account quickly. In your stockbroker, look for the fund transfer method. Money transfers and withdrawals over the internet should be quick and simple. Also, see if there is a cost for transferring funds with that stockbroker.
10. Educational/Learning Resources
Many stockbrokers offer educational opportunities to their customers. Zerodha, for example, provides free education to its clientele through ‘Varsity’ and its blog. Whether you’re still learning, ask your stockbroker if any educational resources are accessible. This is not a must-have feature for your stockbroker, but it is a valuable addition.
A few other things to consider while selecting a stockbroker
The majority of the crucial factors to consider when choosing a stockbroker have previously been discussed. However, there are a few other things that a novice should be aware of while selecting a stockbroker. They are as follows:
1. Low commissions and discounts aren’t always a good thing:
If you are new to the industry, you will require a lot of have assistance to must-have get started. Although it is advantageous to spend less, novices should receive premium services in exchange for a commission. Once you’ve gained some experience, you’ll be able to invest and trade on your own.
Furthermore, there are several discount brokers in India these days that give the cheapest brokerages. Even with bargain brokers, you have a variety of possibilities. Don’t only pick the cheapest option; consider the other variables covered in this article as well.
2. Availability of Offline/Local Branches
Discount brokers have extremely few offline locations, whereas older full-service brokers have a plethora of locations. Offline branches can be a fantastic alternative for newcomers who are not comfortable with the internet. If you can locate a branch in your city where you can meet with a customer service representative in person to settle all of your doubts, then you’re good to go.
3. Keep an eye out for extras and add-ons.
Many stockbrokers provide bonuses such as “FREE Account Opening,” “No Annual Maintenance Charges,” “FREE Additional Vouchers,” and so on. Check out the extras and benefits. It’s always nice to have a few extras.
That concludes our article on how to select a stockbroker in India. The principles presented in this article are important considerations when choosing stockbrokers. I hope you found my article on How to Choose a Stockbroker useful. If you have any questions, please leave a comment below. I’d be delighted to assist you. Have a wonderful day and good luck with your investments.