Everyone thinks it is quite a tedious process to start investing in stocks. But, honestly, back in the day, investing in stocks was never an option for everyone because they were hard to reach. Today is not that day. Here, we just have much more we can look forward to, especially the opportunity to invest in stocks, which has been available since the break of the internet.
Investing in Stocks Before – History of Stock Investments
The process of investing was more time-consuming and expensive in the past than it is now. It was the time when stock brokerages were independent entities. Back in the day – Fixed commissions were the norm, and limited competition meant that these commissions were quite high and non-negotiable.
Due to technological constraints at the time, the execution of stock trades took a long time, from the initial contact between an investor and a broker until the time the trade ticket was created and executed.
The huge mutual fund boom was still years away, and the idea of investing abroad was non-existent. Active stock prices were likewise difficult to obtain; an investor seeking a current price quotation on a stock had few options but to contact a stockbroker.
But today – is there a way you can invest in stocks without a stockbroker? Yes! Simply buy stocks online, but is there more to this conversation? Yes, let’s keep talking.
How do you invest in stocks without a stock broker?
The rise of the internet has brought us closer to so many things we thought we could never get in touch with.
So, what is the way to invest in stocks without a broker? Let’s understand it one step at a time.
Step 1: Open a Demat Account
If you want to trade in the stock market, a Demat Account might make things easier. You can open a demat account online without having to go to a physical location. All you have to do is get in touch with a Depository Participant (DP). Central Depository Services India Ltd (CDSL) and National Securities Depository Ltd. (NSDL) back all Demat Accounts, which are regulated by the Securities and Exchange Board of India (SEBI). As a result, they are completely safe.
(Note: What is a demat account? A Dematerialization account is an online account where you save your stock certificates. This account transforms actual shares to electronic format and can also be used for other securities such as bonds, mutual funds, initial public offerings (IPOs), and so on.)
Since a Demat Account consolidates all of your stocks in one location, financial administration is simplified. This single account can be used to hold a variety of investments, which is inclusive of mutual funds, bonds, exchange-traded funds, and so on. You can also access account statements, rebalance your portfolio, and conduct transactions from any location using your smartphone or laptop.
You can start a Demat Account on your own by getting in touch with the Depository Partner. This process does not facilitate the need of a broker or any other third-party. The steps are as explained to you below:
- Find a DP on CDSL or NSDL portals online.
- When you’ve discovered a DP, contact them and ask for a Demat Account.
- The DP will provide you with an application form. Fill out this form with the necessary KYC documents and send it to the Depository Partner.
- Include the copy of your identification and address (either of these documents: PAN, Aadhaar, voter ID, power bill, ration card, and more.)
- Attach your latest 3 months bank account statements.
The DP would validate all of your information before opening your Account. You would be sent an agreement outlining your rights and responsibilities as an investor. You will also be given an account number and a password to open or access your Demat Account.
Step 2: Buy Stocks with the Demat Account
Before you trade in the stock market, you must first transfer the investment amount from your bank to your online Demat account. When you make a buy order, the shares are credited to your Demat account within two business days or T+2. When you sell your holding, the money is deposited to your trading or bank account within T+2 working days.
What are the Benefits of Investing in Stocks without a Broker?
You might not need a broker to get started – but you need to have a brokerage.
Why do you require a broker but not a broker? To buy a stock, no education or license is required.
To do it yourself, to become a so-called retail investor, all you need is money and an Internet connection. To be successful, to make money, or to save for retirement, education is essential. Before you begin purchasing, learn everything you can about topics such as how to choose an online brokerage and tax ramifications.
Most importantly, figure out who you are as an investor—what your goals are, what your risk tolerance is, and how much time you are willing to devote to managing your investments.
What about a stock broker? Since buying stocks is relatively cheap and simple in the modern day – you do not have to seek the help of a broker.
Conclusion
Looking to invest on your own? Go ahead; you know the queue for it now. It is a big time you start investing without the struggle or extra spending. All you need to care about is setting aside money for your investment.
