In this article I will discuss about brokerage firms , things that you should look into before selecting an Indian brokerage firm, what are the benefits that you derive from Indian brokerage firms. If you are an investor or an unknown investor or you are new to this existing field then this article will grab their attention to provide some sorts of value and information which will help you to choose a better brokerage firm while investing in shares, debentures, mutual funds , company bonds, managing your personal Finance etc. in late 1990′s securities were bought and sold physically without involving any electronic means so the transaction was purely on manual basis. All the financial transactions was carried out using paper. The financial records and the receipts where also recorded through paper. If you wanted to trade any financial security you to go manually to the company and purchase securities. Cash transaction was main source of payment while buying a financial security. I refer financial security to be shares, debentures, mutual funds, bonds etc. so these are some of the financial instruments that people use to trade. Trade in the sense buying and selling of financial instruments. There was lot of limitations behind this manual trading. So gives the latest advancement and development in technology paved a way to carry out all the transactions electronically using the electronic means that is through computer or laptop or smart phone, PDA using Internet facility. This is made a drastic improvement in trading financial instruments online. Unlike in olden days people use to travel from one company to another in order to purchase physical paper shares but today people are buying from their home town easily through Internet and avoiding the wastage of paper called “paperless trading”.
Paperless trading has a lot of advantages when compared to paper trading of securities. In this technology era carrying out any financial transaction has become easy task through the use of Internet. We are able to easily transfer our funds in bank to our trading account and demat account and vice versa.
Movement of money from one account to another account can be easily initiated. Today huge number of brokerage firms are existing in the market acting as a mediator in order to purchase financial instruments and securities. These brokerage firms gives their registered member a platform to purchase securities through their online trading and demat account linking to your savings account with your respective bank. So in this case you can easily open three in one account and linking all the three accounts that is your bank account, your trading account, your demat account easily. I will today concentrate more on Indian brokerage firms rather than going for global brokerage firms. But we can find some of the common features lying in global brokerage firms as well as in Indian brokerage firms.
What is a Indian brokerage firm ?
An Indian brokerage firm is a company incorporated in the eyes of laws and rules which help in trading securities to its members who are willing to trade securities. Indian brokerage firms are rising every year providing numerous benefits to its members. These firms offer financial services by charging commission and brokerage to its members. These brokerage firms act as a liaison between the company and the trading people. Here the company means the firm which is listed in the stock exchange and trading people are buyers and sellers of the stock and also long-term investors. Brokerage charges vary from place to place, account to account. But the brand remain the same. Today every Indian investor is a part of any of the Indian brokerage firm. Without Indian brokerage firms it is not easy to carry out trading process of securities today.
Who is an investor and trader ?
The person who holds securities for long period of time with the intention to sell at the higher price in future is called as investor. Trader is person who holds security for a very short period of time and sells it when the prices of the security rises for a shot period of time. Trader buy and sell the security you need a particular day or is involved in day-to-day trading but the investor targets long-term portfolio of funds. Investors are considered to be the real owners of the company. Investors get a fixed portion of dividends declared by the company when the company make profit. The ratio of dividends is decided by the company. Trader takes huge risk for a short period but investor risk is less because investor goes for long-term investment analysis.
benefits of indian brokerage firms
Let’s discuss more benefits that Indian brokerage firms delivers to its members, its participants, and its partners.
1. A platform to buy and sell securities
The first most important benefit that Indian brokerage firms delivers is about trading securities. They do provide a platform where members can transact in any company security listed in the stock exchange. So they provide a medium for trading securities.
2. Offers trading and demat account.
Members is privileged with trading account which will help the members to buy and sell securities during the market hours. demat account acts as a storage box where all your securities are dumped in for future selling. Demat account offers a great significance to its members because unlike paper trading paper get spoiled at a short span of time but holding a security online and storing it online with demat account. The lifespan is more.
3. Loan on securities
You can avail monitory loan by pledging your securities to your banker. Not all the banks offers loan on securities but if you’re holding huge amount of securities which is worth thousands and lakhs than you can avail this feature called loan on securities. Once you repay the loan back the ownership will again get transferred to you.
4. Banks acting as a brokerage firms
Today leading banks are rendering brokerage services to its members by opening a separate branch units for commodity trading, share trading, forex trading, Bond purchases etc. apart from receiving and collecting money from the people banks offering their brokerage services . In this way you will be able to trust the bank more.
5. Online technical Charts and pictographic diagrams
Indian Brokerage firms help you to get better picture about the company movements through online charts, online curves. Which is a good measure of seeing growth in the company.
6. Trading software and mobile applications
Drastic improvement in technology leads to development of new softwares mobile applications from which you can easily trade without coming to the brokerage firm. This tools are free to use and is provided to all members who are opening an account with an Indian brokerage firm.
7. Long-term holding of securities
Long-term holding of securities has been made very easy using demat account provided by the brokerage firms. So you can hold paper free shares online. They might charge you for using demat account services mostly yearly charges are applicable ranging from Rs.250 to thousand rupees.
8. Dial and trade facility
Now you can buy and sell shares without laptop or Internet. You just have to call the your brokerage firm and they will initiate your order on behalf of you free of cost. If you’re stuck in meeting or if you’re travelling than this facility will be very helpful. You to call and tell them the company you wish to buy, quantity of shares, at what price you wanted to acquire.
9. Learning to stock market
Indian Brokerage firms offer consultancy services to its members by flowing the share trading knowledge to the new members who wanted to learn share trading and buying online securities. This will greatly impact those people who are new to financial jungle. Sometimes this facility is free or sometimes some leading brokerage firms charge a fee for it. Usually there will be seminars conducted online and off-line the member has to just attend this seminars to gain knowledge. Those people who are from background engineering, medical, general category people can benefit from this.
10. Numerous options to trade
Various options are available to members ranging from share trading buying and selling of shares forex trading which is trading of currencies of various countries, commodity trading includes buying of gold and silver and other metals and commodities. So it is not restricted to one service but you can experiment with various services offered.
11. Research and developmental projects
You might be pursuing higher education which requires financial reports to be prepared in that case you need to learn practically certain things to get knowledge and come to a conclusion about the particular phenomena. So brokerage firms helps to give you facts and figures about certain companies that you wish to do research in.
12. Professional experts
You might get key daily tips from your brokerage firm relating to the market up trends and the company acquisitions etc delivered directly to your mailbox similar to your newsletter. So professional experts are hired and paid well in order to execute this activity who have sound knowledge about investing.
13. Tax savings
If you can invest in certain bonds offered by government of India and reserve bank of India then there is no need to pay extra taxes. You will be saving you a lot of tax on your investments by investing in tax saving bonds. You will be notified through e-mail when tax savings bonds are opened for purchase. The risk of the investment in tax saving bonds is very less.
14. Money makes Money
Once you are an experienced investor or an experienced trader you will make a huge amount of money by trading or by investing in the financial instruments. But it takes time to reach a height. So have patience and try to learn and experiment with various financial instruments. We could see some of the worlds richest people and their earnings. When you do a proper research on this richest people you will see that most of them have majority of holdings in financial securities and their spending habits were very less.
So these are some of the benefits that you can derive by associating yourself to an Indian brokerage firm or a global brokerage firm.
12 things to consider before selecting indian brokerage firms – benefits of indian brokerage firms
Now let’s throw some light on certain important aspects that you must look into and consider before you select a leading Indian brokerage firm. Let’s discuss one by one points in detail.
1. Reputation in the market
You must look into those Indian brokerage firms who were leading the market offering quality services with a cheaper price tag. If you have to research on all the existing brokerage firms before you finally decide a firm. Reputation place an important role while selecting a firm.
2. Cost of the products
Another important key factor to consider is about the cost of the services and the packages of the products that they Indian brokerage firm is selling to its customers. You have to select those leading firms offering quality service at a better price option. Prices cannot be too high or too low.
3. Facilities offered
Another important feature is about the things that your brokerage firm offers like only share trading, or only commodity trading, forex trading, financial services, mobile applications and computer softwares for trading, call and trade facility, loan on shares and securities etc. you have to select the best brokerage firm which will offer all in one facilities.
Do not believe in brokerage advertisements. You have to call the brokerage firm and enquire about their products and services. Many online advertisements are attracting consumers but these options sometimes are fake.
5. 24/7 Online chat and support
If you can find any Indian brokerage firm offering online chat and good support then it is very good to go ahead with it. But also look into other aspects of trading.
6. Word of mouth advertisements or by member to member experience
If you like a particular brand of chocolate you tell your friends about that or any other thing that you like. So your friend must be interested in purchasing that brand. Likewise users learn by mistakes and from friend referrals. So see the majority of the users who are using the particular products of a particular brokerage firm and share their experience. Likewise it will be a strong strategy to implement before going ahead for purchase decision.
7. Nearness to the home town
If you’re having an indian brokerage firm nearness to your place you can easily contact them or learn good trading skills by going there and watching the people at work.
The important part is the discount given to a member at the initial stage while opening an account. In later stages also discount can apply like reducing the brokerage rates, reducing the AMC charges etc.
9. Better relationship and better support
Better dealing of members and customers in a right way to increase the relationship between the customers and the company.
10. Informing about the price changes
Your best Indian brokerage firms is that which will inform the price changes accordingly to its members and the shareholders so that the proper communication is taken place. There must be no miscommunication between the company and its members.
11. Better information supplies
Brokerage firms should try to send better analytical information and research reports of a particular company included with market trend analysis.
12. speedy in services offered
Services that the Indian brokerage firms offers should be speedy. Speed should be in every activity starting from the account opening, account verification, granting facilities and offers etc. speedy in services including quality of service thrives for excellence.
So here are some of the things that you must consider before associating yourself to an Indian brokerage firm which offers hassle free trading and better online support.
I hope that this article has delivered you the significance about investment and securities.
I usually end my article by motivating you guys to save money and invest in stocks, debentures, mutual funds, bonds, Treasury bills etc. you are making a wise decision towards investment and continue to save money and invest in securities.
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