What Are The Different Types Of Brokerage Accounts?
After the pandemic, there has been a sudden rise in the number of Demat accounts (also known as brokerage accounts) in India. More and more people are looking to invest and trade in stocks as they learn about the online share market investment and their potential to create long-term wealth. But as a beginner, you may wonder where to start your investment journey.
The answer is by opening a zero brokerage account. But you also need to decide which type of brokerage account is right for you. Should you opt for a traditional full-service brokerage account or a discount brokerage account? And what about zero brokerage accounts? With so many options, it is easy to get confused. But don’t worry, this article will answer all your questions.
An online share market app allows you to buy and sell shares in the stock market. However, there are numerous options available. Let’s look at the types of brokerage accounts and identify which is best for you.
Types of Brokerage Accounts:
Discount Brokerage Account:
This type of account allows investors to buy and sell stocks and securities at a lower brokerage rate. A discount brokerage account comes with limited additional charges. It requires investors to plan, research, and trade on their own. This type of account is the most suitable for beginners. A broker like m. Stock provides a simple and user-friendly platform with fundamental data and technical charts for every stock.
Full-Service Brokerage Account:
Apart from providing a platform for trading and investing, a full-service brokerage account provides a wide range of services, such as investment advice and professional portfolio management. All these services include additional charges. This type of account is more suitable for wealthy investors who don’t want to do their own research and want advice on the stocks to buy and sell. When you opt for portfolio management services, the brokers control the buying and selling of your investments. Full-service brokers charge additional fees for these services. Hence, this type of account is not ideal for beginners.
Margin Brokerage Account:
This type of account allows you to borrow money from the brokerage firm to purchase securities. The securities purchased with the margin are held as collateral when you open Demat account. Both full-service and discount brokers offer margin facilities. This feature allows traders to increase their trading potential, but it also attracts risks. If a trader makes a wrong trade using the borrowed amount from a margin account, they can end up having a huge debt.