Choosing a Stock Broker in India
After the Karvy Fraud of ₹2,000 crore with Investor’s hard-earned money and to their portfolios. Choosing a Stock Broker in India needs a takeaway review on it.
Types of Stock Broker in India
Before considering any major steps it is always important to learn the types of stock broker in India and what facilities they provide. In one of our earlier article (The Best Performing Stock Brokers in India), we already mentioned there types i.e. Traditional & Discount Brokers. Along with, their Services & Customer Benefits.
Read our Article: The Best Performing Stock Brokerage Houses in India.
Today, we take into consideration 5 points which every investor needs to take care of before choosing any stock broker. These are:
5 Things to Consider
- Customer Service
- Less Charges
- Ease of doing trading Facility
- Guidance Support not trading tips support.
After the exploits of Karvy Stock Broking, it has become very important for all investors to know about their Stock Broker – How does the Stock Broker works ? and How much safe is our money/demat account with the broker?
Let us understand in details all such 5 steps that we (as an investor) need to take with our broker:
Today, we all know about the POA i.e. Power of Attorney, due to which the Karvy Stock Broking has scandalized with the shares/holdings of small investors. So, it is important for you to understand that the broker is working with you in full transparency. That is, they are providing all the necessary information about the demat account & its holdings in time along with the transaction bill/contract note. Contract note is one of those receipts which saves you from getting misplaced from your trading activities with the broker. It’s like taking purchase receipts of Hotel/Petrol Bills.
Every Stock Investor/Trader or any other market participant is in the market to do business/earn extra money/wants to appreciate their invested capital but if your broker/intermediary deducts more money/charges from you as trading transactions, then its time to either be careful and talk to your broker immediately or get the brokerage reduced.
There is very good saying “If the cost of doing any business is increasing more than the profits, then what is the use of such business?”
In India, there are more than 250 stock brokers who provides trading & broking services to investors in their own way. And wants to deliver such services in a good interest. But, nowadays there are some brokers/channel partners/agents who manipulates/lure investors through social media advertisements.
So, it is very important for every investor to know whether your broker is treating you properly or not i.e. a delightful customer service. For that, you should keep in mind that your pay-in/pay-out obligations for every purchase and sale transactions are on time (i.e, on the same day or within 24 hours), give the net balance details or the details of your existing/new financial assets related information on time. Also, there should be a Relationship Manager/Support Team/Personalized Services for you, in case of any doubts related to Demat & Trading Account.
With the purpose of earning more money as commission/brokerage – Sometimes, stock brokers forget that they are regulated by SEBI (Securities Exchange Board of India), to provide trading services to investors/market participants at ease while safeguarding their interest & information rather than destroying their hard-earned money/wealth. The biggest problem of any broking industry is that under the disguise of making more brokerage, they tend to advice clients on investments.
Thus, it’s important for the investor to differentiate between the guidance and the tips. Here guidance is about the trading system, software & the financial instruments not about where/in which instrument to invest.
Nowadays there are some brokers who manipulate investors to earn more money in short span of time i.e. TIPS. Thus, more the greed of investors on daily basis, the more brokerage the broker make – which directly/indirectly increases investor’s cost.
That’s why, investors should keep this in mind: that they should learn stock market trading/investment as an activity based on knowledge & calculation not on the basis of any tips provided by brokers/anyone without analysis.
Trading is an art, but learning it – is as important as doing the way it is. Therefore, investors should keep in mind that their broker should provide them a good and easy to do trading system. Through which they can make better trading & investment decisions.
As, Disclaimer says “Stock Market Investment is Subject to Market Risk. Please read all instrument related documents carefully or consult with your SEBI Registered Financial Planner/Investment Advisor.”
A demat account is an account where people keep their capital into financial assets as investment, such as money in a bank account. Once the financial assets are in the demat account, keeping the information about it – is as important as much as the responsibility of the investor to regularly update their personal information in the Demat Account. Just like a Bank Customer takes responsibility & cautious about its bank account transactions & the liquid money in the Bank Account.
Always remember it doesn’t matter what type of the stock broker you choose, what matters is the transparency, confidentiality & trustworthy relationship between you (Client) & the Broker.
Be vigilant with your account activity just like you’re with savings account.
Also Read: 8 Smart Tips for Smart Banking