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This pandemic has compelled many of us to think about securing our future. Financial security has been at stake for many of us. When thinking of the future, the first thing that comes to mind is investing some of our savings to earn an extra income, if not instantly, after some time. The best option for investing in our future is through shares. Investing in shares has become a must requirement for many people these days. There have to be some basic steps that we have to follow before we start investing in the share market. The first requirement for shares trading is the presence of a Demat and trading account.
To start the transaction in shares, the essential thing is to open a Demat account linked with the standard bank account. The Demat Account is that account that holds all the certificates of the shares in an electronic form. The person who uses the account for his transactions and whose name the account belongs is called the account holder and the shareholder. The one who regularly trades in the shares also needs a trading account. All the shares’ transactions are facilitated through this account only.
How to Open a Trading Account
When a person starts to trade in shares and the stock market, there has to be a trading account. Many banks provide additional Demat facilities attached to the bank account. Instead, the opening of a Demat and Trading Account is not any complicated process. Just some online verifications of some documents are needed to open the account. All three accounts- the bank account, the Demat Account, and the trading account, are liked and function in accordance with each other.
As we know, the bank account is used to deposit and store money. The Demat account is needed for storing the electronic form of the shares, but to make a transaction in the shares and learn to trade online is needed. An investor can’t buy or sell shares and stock without a trading account. The first step to opening a trading account is selecting a brokerage firm after researching on the basis of value-added services and charges applied. Choose the best option from the selected ones.
The next step involves filling out an account opening form and attaching some required documents. Once the form, along with the documents, is submitted, verification is needed. In 3-4 days, as the verification is completed, the account automatically comes into function. The brokerage executive guides every step of the account opening. If needed, they can reach out to you for any verification process.
How to Add Money in the Trading Account Using IMPS and NEFT
There are many ways to transfer money to the trading account for facilitating transactions. Funds can be transferred through NEFT, IMPS, RTGS, etc. If the money is transferred from the bank account of another bank to the trading account of another bank through NEFT, usually, it takes 2-3 hours to complete the transfer. But if the transfer takes place between the accounts of the same bank through NEFT, the transfer takes place instantly.
Before transferring, the trading account has to be added as a beneficiary to the bank account. After the completion of adding a beneficiary, it is possible to transfer the funds. For transfers, a password is needed, and then authentication is done through OTP. This whole transfer takes no charges. The NEFT transfer can be done online through net banking or NEFT cheque deposit at the branch.
There is an advantage to transferring funds from IMPS over transferring through NEFT. Through NEFT, we can’t transfer the funds outside outside described banking hours, like 9.,00 am to 6.00 pm. If the transaction is done other than the banking time, the transfer will be effective at the start of the next working hour. But this is not the situation with IMPS. Through IMPS, the transactions can be done at any time out of the banking hours or even on holidays. But facilities come with a cost. There are charges applied for the transactions.
Documentation Needed for Transaction in Trading Account
Although the transfer of funds to a trading account is an easy process to ,avoid any kind of audit trail, you have to take care of some little details. All the transactions done through any payment gateway should have a record of the snapshot of the payment details. This can help you maintain and tally the records done through the transactions, and the credit should be seen in your account.
If the transfer is done through a broker, all the snapshots should be attached with the mail, and the copies of the cheque and DD also should be kept to avoid any discrepancies. This will ensure transparency in your and your broker’s relationship. Before making a transaction, double-check the details at each step to ensure a secure transaction.
Benefits of Trading Account
As we come across the information related to the stock and shares that need a Demat account to keep and a trading account for transactions. The use of the trading account is not limited to shares only, but through a trading account, we can trade in bonds, gold, commodities, and even currencies. An online trading account helps you access many trades in one place. An online trading account saves time when visiting the bank for any kind of transaction. Trading Account helps you to access the trading done with BSE, NSE, NCDE, and many trading mediums, and that is done from your home with a laptop or even mobile.