Investing in the stock market is a great way to make your money work for you, and build income streams beyond your salary. While salaries are a limited and active source of income, your investments if done properly will continue to give you returns long after you retire. If you are investing in the stock market, you will have to do so through a depository participant (DP), who will facilitate your interaction with the stock market. Here is where a brokerage account comes into play.
- What is a brokerage account?
A brokerage account is an account you open with your brokerage firm of choice, depositing money into the account, and subsequently being able to trade in securities, invest in bonds, mutual funds investment and buy and sell stocks. While you require a trading account to go along with your brokerage account, the ability to open a broker account online due to the highly digitized market space will let you do so in minutes, and makes the process of you having to open a brokerage account and trading account seamless, providing you with all the tools you need to begin your journey as an investor. Use the Brokerage calculator to know the details of brokerages paid for your investments
A brokerage account functions similar to a bank account, with the difference being that while your bank account stores your money, your brokerage account is used to store securities such as stocks. You open a brokerage account, as the name suggests, with a brokerage firm, which will help facilitate your trades. Based on the type of brokerage firm you go with, your brokerage account will also vary.
A discount brokerage account, for instance, will offer you the bare bones of trading; a stable and secure interface to trade and access the stock market. All other research, analysis and actual trading is done by you and the customer themselves. In contrast to this, if you open a brokerage account online with a full-service brokerage firm, then you are likely to get additional services such as a professionally managed investment portfolio, financial advice etc. Keep in mind, however, that these facilities naturally come at an increased cost.
- How to open a brokerage account?
Due to today’s digital age, you can easily open a brokerage account, with most brokerage firms offering you the ability to open a brokerage account online. Once you pick your broker of choice, you can open a brokerage account online by visiting their website and beginning the signup process. This is the same as opening any other account online, though it has some additional security steps due to the fact that finances are involved. You will have to fill in your personal details such as your name, address, Aadhar card and pan card numbers for KYC purposes, and pay minimal opening fees. Though, most online discount brokerage firms let you open a brokerage account online without any fee at all.
Conclusion
A brokerage account (combined with a trading account) is your one-stop-shop for all your trading needs. It offers you the ability to store your purchases on the stock market, and sell them for higher returns if you wish to do so. You can now easily open a brokerage account online. With a wide variety of brokerage firms available, you enjoy the benefit of being spoiled for choice. However, it is recommended that you do your research to find a brokerage firm that fits all your investing needs, and then proceed to open a brokerage account with them.
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