When you wish to begin trading on the stock market, one of the first things you will need in order to accomplish this is a brokerage account. Also referred to as a Demat account, a brokerage account is opened with your depository participant (DP) such as a broker. Combined with a trading account and your bank account,you will be able to use your brokerage account to buy, hold and sell stocks. You may now open an online demat account by downloading a mobile trading app or contacting the broker through the website.
Over time, markets have evolved in order to cater to the various needs of investors and traders. Some are looking to learn the ropes of the stock market on their own accord and have the time to do so, in which case they might be better suited using a discount brokerage service, which provides you with the basic tools you require to trade on the stock market, but the brokerage company offers no additional services. On the other hand, others might not have the time to learn the stock market from scratch, but still, wish to invest in it. In this case, a full service brokerage account might be better suited. In this article, let’s take a look at full brokerage vs discount brokerage accounts, and the difference between discount broker and full service broker.
A discount brokerage account is what you would opt for if you are looking to learn how to invest and trade by yourself, or are already experienced. Given that you are doing all the trading yourself, a discount brokerage account has very limited fees such as transaction and AMC charges, which are kept to a minimum. This way, you can apply your own expertise to save on paying these additional fees.
However, Full service brokers, in addition to offering you the trading platform and trading account in order to trade, also offer value through this advisory capacity. A full service brokerage firm offers its clients guidance and advice on how to invest your money, how much to invest and where to invest. Full service brokerage firms also offer portfolio management services, meaning a professional will be making sure your portfolio is frequently updated and the fat is trimmed. The trade-off, of course, is the increase in fees you pay, as you are essentially hiring someone to do the trading for you.
In this article, we have looked at full brokerage vs discount brokerage. As can be seen above, both services have merits of their own. While a discount brokerage firm will provide you with all the trading tools you require in exchange for a minimal cost, full service brokerage firms will offer you investing guidance in exchange for a higher fee. The true difference between discount broker and full service broker then is your needs. If you have the technical prowess to trade yourself, then you might opt for a discount brokerage account. If you wish to invest but do not have the time to do so, a full service brokerage account might be a better option.
Related Articles: How to Open a Demat Account Without a Broker | Factors to Keep in Mind While Opening a Demat account | Factors to Consider When Opening a Demat Account | 10 Points to Remember When Operating your Demat Account | Types Of Demat Account & Trading Account |