Know Why is Discount Broking Popular in India | Espresso

Why is Discount Broking Popular in India?

You may be aware of the saying “a penny saved is a penny earned”, and this saying can be understood by knowing the difference between traditional Demat account and discount brokers.

The concept of zero brokerage in India is set to take the world of investments by storm, and as more and more investors learn of its benefits, the more they seek to get a zero brokerage trading account instead of a traditional online Demat account to save on the brokerage fee.

Before we explore some reasons behind its popularity, it is important to know what is a zero brokerage trading account and what it entails.

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Traditional Trading Account vs Zero Brokerage Trading Account

When you open a traditional online Demat account and trading account, you can use it to hold your financial commodities and to buy and sell shares. In addition to this, investors also get services against their Demat accounts, such as market research and investment advice.

However, with a regular trading and Demat account, investors have to pay a certain amount of brokerage every time they execute a trade. This brokerage fee is usually a percentage of the turnover on the trade. In addition to the brokerage charged on trading, brokers also charge for the provision of certain specialised services.

On the other hand, a zero brokerage trading account eliminates all the charges for trading online. These services are provided by what is called a discount broker whose primary job is to facilitate quick buying and selling of shares online.

The best discount brokers in India offer trading services at a low brokerage rate and execute rapid transactions. While a zero brokerage account does not provide other services of a regular Demat account, it is still a highly suitable option for those who trust their investment decisions.

Why Discount Broking is Better Than Traditional Broking

Here are some benefits of discount broking:

  • Saving:  When you opt for an online Demat account with zero brokerage, you need not worry about the brokerage fee because the commission is either negligible or, in some cases – with the best discount broker in India - even zero
  • Efficient Trading Platforms:  As discount brokers have to keep the trade cost-efficient, their platforms that facilitate trading are swift.
  • Analysis Tools: While they don’t offer other specialised services of a regular Demat account, some discount brokers equip their clients with the tools to analyse the capital market before they make investments using their online Demat account.
  • User-Friendly Interface: The best discount broker in India can be distinguished by its efficient and user-friendly interface.

Why are Discount Brokers Popular in India?

Following are some reasons why a zero brokerage trading account or discount brokerage is gaining popularity among Indian investors:

  • Faster internet with more bandwidth has irreversibly transformed the Indian investment landscape. With a simple online search, people can make investment decisions quicker and from the comfort of their homes.
  • There is better financial literacy as more and more people start to see the benefits of investing and focus on wealth creation, particularly after events such as demonetisation.
  • The concept of zero brokerage is so compelling because it’s cheap. Investors need not share a piece of the pie they earn in the share market with the brokers.
  • As there are no incentives involved, investors are not pushed by brokers to “buy” more than they want to.
  • The youth of India is investing in the stock market, and as they are familiar with technology, they prefer to invest using the platforms provided by the discount brokers as they find it more convenient than the traditional methods.
  • Finally, these young investors have learned to trust their judgment and rely on their research instead of blindly trusting “experts.”

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FAQs

When you go to open a Demat account, your depository participant (DP) offers you certain specialised services aside from the basic trading facilities. With this traditional or full-service online Demat account, you are expected to compensate the broker with a brokerage fee and also pay charges to avail of consultation services and market research reports, etc.

When you open an online Demat account with a discount broker, you need not worry about the brokerage charges as they are either negligible or even zero. A discount broker is someone who offers these zero brokerage services.

One of the easiest ways to find the best discount broker in India is to go through the listings that reliable investment platforms have published. However, before you zero in on a broker, you must check their rating and the range of services they offer.

Financial literacy is key, and therefore before you open an online Demat account, you need to know about the different financial services such as zero brokerage that are provided.