Are you looking to indulge in stock trading? If yes, the first and foremost thing you need to understand you can’t do it entirely on your own. You would need the help of a stock broker who usually acts as an intermediary between you and the stock exchange. The primary role of a stock broker is to enable the buying and selling of stocks for the investors.
A stock broker needs to be a registered member of SEBI (Securities & Exchange Board of India). There are primarily two types of stock brokers in India – Full-service Stock Broker and Discount Broker.
It’s actually easier to look at circumstances when you don’t need a brokerage account than it is to start with the reasons why you need one. If you wish to invest, you’ll need a way to gain access to the funds that will help you achieve your financial objectives. There are only a few options for achieving that goal.
Here are 5 main reasons why it is imperative to choose one of the stock brokers in India.
The majority of people put their extra cash in a bank account first. Checking accounts normally pay very little interest, but you can find savings accounts or certificates of deposit that offer at least some interest. The problem with putting your money in a bank account to invest is that the rates of return you’ll get will never come close to what the stock market has traditionally offered investors. You’ll never discover an investment designed to provide you with actual stock market exposure offered by a bank’s typical banking operation.
The customer service being offered by the cheapest broker in India should be quick, efficient, proactive, transparent, and solution-oriented, including the back-end settlement of enquiries and complaints. The designated representative should be immediately accessible at all times, and critical updates should be proactively provided on the customer’s preferred channels, utilizing technology to its full potential.
Latest technology and investment choices
Cutting-edge technology can be a vital enabler if it is used wisely rather than just bought. For example, in order to examine the volume, velocity, diversity, authenticity, and value of data and uncover organic revenue prospects for their clients, organizations must have a solid combination of a domain and technical competence.
Mutual funds are a far more sensible approach to investing that does not require the use of a stock broker. These investments entail numerous individuals combining their resources into a single investment vehicle, with a manager managing the money and investing it according to a set of goals. Mutual funds specialise in a wide range of investments, including stock mutual funds that focus completely or mostly on equities.
Better decision making
Utilizing a stock broker to open your own brokerage account demands a different decision than using bank accounts, mutual funds, or independently managed accounts. Fundamentally, the fundamental reason why a stock broker can be the key to life-changing wealth is that when you create a brokerage account, you take full control of your investing portfolio. You don’t have a bank, a mutual fund manager, or an investment professional tugging at your heartstrings, trying to figure out the best way to invest your money.
Access to various tools
You’re the one in charge of making that happen, and while a competent stock broker can provide you with the tools you need to increase your chances of long-term success, it’s the effort you put in that will determine your long-term outcomes.
A competent broker’s advisory value is fundamentally holistic. It assists the client in making disciplined and diversified purchases in accordance with their income profiles and risk appetites, maximizing tax benefits and market opportunities. It explains the complexities that sometimes perplex small investors, such as the advantages and disadvantages of load vs. no-load mutual funds, as well as lump sum and SIP investments. It emphasizes the critical role of a safety margin in portfolio management.
Good advice also includes informing the customer about the dangers of extreme caution and greed, as well as how, thanks to the efforts of vested interests, the term “multi-bagger” is sometimes reduced to a misnomer. It aids the client in comprehending market cycles, such as strong upswings and declines, as well as the underlying rationale (or the lack of it). It identifies morning players with indisputable value props and explains when and why staggered purchases or buying in downhill trajectories are advantageous. It shows how a shifting landscape may turn laggards into potential bets and high-fliers into also-rans in a matter of weeks. It deconstructs the union budget in order to provide a clearer and more actionable understanding of the possible consequences of severe and sanguine policies.