This is the fundamental account from where you will transfer your money to brokerage firm for buying the stocks and receive the dividend amount or settlement amount from the stocks you buy.
Trading account :
For buying or selling stocks you need to go thro' a broker only.
And these brokers from the brokerage firms offer a platform for online trading.
To use this online trading account, an user ID and password will be provided.
In simple terms this a/c is just like logging into an email account, by using a user ID & password....
Demat account :
When shares are bought, it needs to be stored in electronic format. For this purpose demat account is used. This is abbreviated as DE-MATerialised account
This account is similar to savings bank account. The only difference is that, shares get credited and debited instead of money.
PAN CARD:
Permanent account number (PAN) is a must for all financial transactions that occur in INDIA. This is to ensure that every individual or a firm pays the tax diligently for the growth of the country.
Once you have the above requirements, you can go for the investment in stocks!!!
• Demat a/c are provided by most of the banks. But you can’t buy or sell shares without trading account. Since trading account is offered by brokerage firms & very few banks offer trading a/c such as ICICI & HDFC.
• But all brokerage firms offer Demat & trading account. The advantage of this is lesser cost for maintaining two accounts. Hence lesser brokerage.
• And few banks have a tie-up with brokerage firms, there by having a flexibility of easy transfer of money from S/B a.c to trading a.c . and storage of shares in the Demat a.c.
• Ex: Axisbank has tie-up with Geojit but cost associated with such tie-ups are higher & hence the cost of broking & maintenance is little higher when compared to its peers.
Hence it is wise to choose a broking firm / bank having the features of safe & convenient online transactions.
Nice lesson..
ReplyDeletegood one
ReplyDeleteIt is easy to understand for starters.
ReplyDelete