Articles

Brokerage Charges And What Discount Brokerage Entails

by Pankhudi Dave Head Finance Manager
There was a time when share market investments came with huge added costs; the cost of paying brokerage commission and fees for executing every trade. But since the arrival of the digital age, share market investments have gotten better streamlined. Today, you can invest directly through your demat account and shares, mutual funds and other investment instruments are directly credited into your account. The cost of brokerage has been reduced to a great level and you can easily get the lowest brokerage charges in India on your investments. But it is important to understand the various types of broker charges levied by investment broking companies and what low discount brokerage entails. Read on.

Different broker charges investors have to pay

The charges levied by brokers remains one of the most popular share market FAQ. This is one of the first questions that any new investors will ask, and with good reason. After all, these charges can affect the profits booked by the investor.
Brokerage firms typically levy these below mentioned charges:

•    Account Opening charges when you open a demat account
•    Annual Account maintenance charges debited from your savings account linked to your demat account
•    Commission for every transaction conducted i.e. buying or selling shares, mutual funds and other market instruments
•    Charges for transferring funds from your savings to your demat account
•    Charges levied for the research and analysis services the brokerage firm provides
•    Other miscellaneous brokerage charges based on customised solutions requested by customers, for instance private financial advisory services.

As mentioned above, brokerage firms levy a charge or a commission for the services they provide. For instance, say you make an investment worth ₹100,000, for which you have to pay a small commission of 0.2%, which equals to ₹200. This amount of ₹300 is the brokerage fee levied by your brokerage firm.

Low cost brokerage – Things to remember

Every Indian investor prefers to opt for a brokerage firm that levies the lowest brokerage charges in India. But there are a few things you need to remember while speaking about low-cost or discount brokerage. They are as under:

•    Broking cost entails a lot more than just brokerage. As mentioned above, you must also bear account opening charges as well as annual maintenance charges.
•    As an investor, it is in your hands to judge the charges quoted by the discount broker. The judgement should be based on the above mentioned costs, after which you should calculate the break-even level for Sensex or Nifty trade.
•    Consider the customer service and the technology provided by brokerage firms while calculating brokerage charges since all trades are now conducted online.
•    Check if the brokerage firm is providing the call-and-trade back-up facility, which streamlines trades and does not cost much.
•    If you are new to the world of market investments, it is best to opt for full service brokers instead of discount brokers. The latter are ideal only for experienced investors.
•    Remember to check the hidden costs associated with broking services offered by discount brokers. Make sure that you read every detail, especially if the brokerage fees are suspiciously low.

Final word: Brokerage fees are associated with all kinds of share market investments including commodities, options, futures, day trading and so on. It remains one of the most asked, common commodity FAQs as well, typically because the quantities of commodities traded are generally higher than basic share market investments. You should speak to different companies to understand the various brokerage fees levied by them on different investments and then choose a brokerage firm to make your investments.


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About Pankhudi Dave Freshman   Head Finance Manager

9 connections, 0 recommendations, 46 honor points.
Joined APSense since, July 2nd, 2019, From Mumbai, India.

Created on Dec 12th 2019 02:31. Viewed 387 times.

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