Opening your first demat account: what to know

Interest in investing has exploded in India, and most first-time investors start with a demat account. Here's what the jargon means and what to check before opening one.

Demat vs trading account

A demat account holds your shares and other securities in electronic form. A trading account is what you use to place buy and sell orders. Most brokers open both together, so you'll often hear them spoken about as one.

The costs to compare

• Account opening fee — many brokers now charge nothing.
• Annual maintenance charge (AMC) — a yearly fee for the demat account; some brokers waive it.
• Brokerage — the fee per trade. Some charge zero for delivery (buy-and-hold) trades and a flat fee for intraday.
• Other charges — exchange fees, taxes and depository charges apply on trades regardless of the broker.

What you need to open one

• PAN card and Aadhaar linked to your mobile number.
• A bank account in your name.
• A photo of your signature, and a short video KYC.
• Income proof — only if you want to trade in derivatives.

A beginner's checklist

1. 1Add a nominee when opening the account.
2. 2Start with an amount you're comfortable leaving invested for years.
3. 3Prefer understanding a company or fund before buying it.
4. 4Avoid tips from strangers on social media and messaging groups.