You will need an investment or trading account to buy and sell securities in India. You will also need a Demat account linked to your investment account for holding securities for a given period. Stockbrokers offer trading accounts to investors and allow them access to securities listed on stock exchanges and financial markets. To earn revenue, stockbrokers depend on the brokerage collected from investors. For every transaction made by a trading account, you might be asked to pay a brokerage to the stockbroker. However, the brokerage burden on investors has lessened with the rise of discount brokers in the past few years. Let us discuss how zero brokerage trading account are helping investors.
What Exactly is a Zero-Brokerage Investment Account?
In the past few years, discount brokers have come up with the concept of zero-brokerage investment accounts. Discount brokers are often credited with fueling the growth of retail investors in India. A zero-brokerage trading account applies minimal commission on transactions. The commission can be exactly zero for several traders. For example, many discount brokers charge zero commission for equity trading. On other transactions, the brokerage might be a minimal flat fee. Irrespective of the value of the transaction, investors will pay the minimal flat brokerage. It is of great help to retail and small-scale investors, who tend to save every single penny. Institutional investors also benefit from zero brokerage, as they will pay a small flat fee for large-value transactions.
You might be thinking about how the broker makes money when they don’t charge brokerage. As discussed above, zero brokerage is usually for equity brokerage trading. By offering this facility, stockbrokers attract new investors. As new investors try the equity trading option, they become hungry for more. They might try to invest in a wide range of securities and diversify their portfolios. Since there is a flat or percentage fee for other trades, brokers can make money. The idea behind zero brokerage trading accounts is to pull in a large number of investors. Once a stockbroker has a vast user base, it can market different products and offerings. A zero-brokerage investment account will have no hidden charges to support retail investors.
Demystifying the Concept of a Zero-Balance Demat Account
Now that you have understood the concept of zero brokerage, you must also know about zero-balance Demat accounts. Trading brokers in India require investors to keep a minimum balance in their Demat accounts. However, small investors might not make trades regularly, thus failing to meet the minimum balance condition. To solve this problem, many discount brokers have come up with the zero-balance Demat account facility. Even if the balance in the Demat account reaches zero, there will be no fine imposed on the account holder. It allows retail investors to stop trading and draft better investment strategies. Together zero-brokerage trading accounts and zero-balance Demat accounts have helped several investors save money on their trades.
In a Nutshell
Zero-brokerage trading accounts are a groundbreaking revolution for retail and small-scale traders. They allow investors to save money on every transaction, as there is zero or minimal brokerage. Trading brokers in India attract new investors with the help of the zero-brokerage facility. You can count on Religare Broking for a minimal brokerage for different transactions. Open your zero-brokerage trading account and start investing now!