Financial planning and investment must always be done prudentially. You can multiply your money by going with the right kind of investment. Based on your risk appetite and your need to create wealth, investment in the stock market can be done which is a good option for you.
To start investing in stock market, you need to have a Demat account and a stock broker who would trade for you. There are several noteworthy points you must understand before finalizing on a share broker. One of the main factors is to have a low brokerage trading account. For each transaction, you are doing, the share broker gets a percentage as their commission. The brokerage would also high as the number of transactions/ volume of trading goes up.
Types of Brokerage
Traditional Brokerage: The traditional brokerage is when a certain percentage value is charged for each trade. This percentage value will be fixed, and as you increase the amount of money on trading, the brokerage would also go up. This is called as the traditional or full-service brokers. For example, if you are trading for Rs. 100000/- the brokerage you will have to pay would be Rs. 500/- if the brokerage is fixed at 5%.
Flat free or discount brokers: Such brokers fix an amount for each trade rather than a percentage. For example, Rs. 20/- per transaction will be fixed irrespective of the amount traded. This is very useful when you are trading multiple times in a day. You can save notable amount if you are going with a flat free broker. Nearly 90% of the brokerage amount can be saved, the service tax on brokerage amount would also be less.
Since you will be having a continuous relationship with the share broker and since it is difficult to switch once you have started trading, it is important to choose the right share broker. Always try to choose the share broker who is offering you the lowest brokerage charges in India.
Always compare multiple Share brokers before you finalize your choice. Most of the firms offer free orientation which will help you to get started on trading.