Best Online Stock Brokers for Beginners
First important thing you should do for your investment is to choose to a right stock broker. If you are new to investing and don’t want to pay high brokerage charges, Then online discount brokers are certainly the best choice. Conventional broker or discount broker – There might be some confusion. This article is supposed to end all that confusions and help to choose the Best Online Discount Brokers for Beginners.
Some of the best online discount brokers for beginners are :
- Zerodha
- 5Paisa
- Wisdom Capital
- Upstox
- Trade Smart Online
Zerodha
Zerodha is the first discount-broking firm which introduced the concept of discount broking in India.
| Commission charged/Brokeragee | Rs 20 /trade |
| Account Opening charges | Rs.300 |
| Demat Account Maintenance Charges | Rs.300 per year |
| Online Trading Platform | Zerodha PI |
| Rating | 4.5/5 |
Zerodha is the first discount-broking firm which introduced the concept of discount broking in India. It is the pioneering firm of all the discount brokers offering all-round services to its customers. It provides you the trading platforms to invest in equities, debts, currencies, derivatives, and commodities. The stock exchanges include NSE (National Stock Exchange), BSE (Bombay Stock Exchange), MCX, NCDEX, BTST, Mutual Funds, Forex Trading Spot etc.
5 Paisa
In terms of brokerage, 5 paisa is another wonderful option for beginners. It offers 0% brokerage with a flat fee of just 10/trade which is quite affordable.
| Commission charged/Brokeragee | Rs 10 /trade |
| Account Opening charges | Rs.650 |
| Demat Account Maintenance Charges | Rs.400 per year |
| Online Trading Platform | 5 Paisa Trade Station |
| Rating | 2.8/5 |
In terms of brokerage, 5 paisa is another wonderful option for beginners. It offers 0% brokerage with a flat fee of just 10/trade which is quite affordable. It is not the only case as 5 paisa also gives an opportunity to invest in mutual funds which is missing with other brokers in the market. Apart from broking facility, it takes a big leap further in advisory section which is gaining more popularity among beginners. The interface and ease of use of 5 paisa trade station is another symbol of its dynamism which takes in the list of top 10 discount brokers.
SAMCO
SAMCO even provides a call and trade service to its clients and thus can termed as one of the top-rated discount brokers in India.
| Commission charged/Brokeragee | Rs 20 /trade |
| Account Opening charges | NIL |
| Demat Account Maintenance Charges | NIL |
| Online Trading Platform | Samco Web Express |
| Rating | 3.2/5 |
It is another discount broker which has earned great reputation in the broking arena by offering free account opening service along with free maintenance. In fact, its trading platform popularly known as SAMCO web express is reliable and works at high speed. As far as brokerage charges are concerned, SAMCO charges 20/- per trade. It is also necessary to mention that SAMCO even provides a call and trade service to its clients and thus can termed as one of the top-rated discount brokers in India.
Wisdom Capital
Wisdom Capital is one of the most preferred discount stock brokers in India which forayed into stock broking in 2013.
| Commission charged/Brokeragee | 0.00% in all segments |
| Account Opening charges | NIL |
| Demat Account Maintenance Charges | Rs 999 +GST(1 time only) |
| Online Trading Platform | NSE NOW, NEST, Fox Trader |
| Rating | 4.5/5 |
Wisdom Capital is one of the most preferred discount stock brokers in India which forayed into stock broking in 2013. It is one of the best discount stock brokers in the brokerage industry due to it’s a plethora of features such as vast margin, least brokerage and an excellent trading podium. Wisdom Capital has primarily three plans for the budding traders known as freedom plan, pro plan and ultimate plan. The other benefits attached with the Wisdom Capital are free account opening and low demat account maintenance charges which is just 999/- (excluding 18% GST, that will cost you Rs 1180/- in total for Lifetime).
Trade Smart Online
Trade Smart Online has set a benchmark in enabling transparency and trust worthiness in broking services in today’s landscape.
| Commission charged/Brokeragee | Rs 15 /trades |
| Account Opening charges | Rs.200 |
| Demat Account Maintenance Charges | Rs.300(2nd year onwards)) |
| Online Trading Platform | NESTr |
| Rating | 3.8/5 |
This broker has set a benchmark in enabling transparency and trustworthiness in broking services in today’s landscape. Though the trading charges are at Rs 15/ trade, but it is nothing when it comes to the features which it provides to its valued clients. Besides this you will get your account opened at just 200/- which is reasonable when compared to other brokers. While the maintenance charges are put at just 300/ year. The NEST trader which it uses makes it to the list of best discount broker. With the boom of internet in India, particularly in the stock broking segment. This made it easier for aspiring investors to invest in stocks like never before. And the rising Indian economy is giving wings to their dreams in the most remarkable manner.
What is a stock broker?
Stock brokers are largely referred as agents who are skilled and certified to invest in securities market. They typically act as agents for buyers and sellers of stocks and charge a free against the delivery of their services. Here, it is necessary to keep in mind that the stock broker does not own the securities but just offers the service for the investor.
In India, there are primarily two types of stock brokers popular among traders and investors – Discount Broker and Full Service or Traditional Broker.
Choosing between a full-service or discount broker is a big decision for investors. Should you go with the straightforward, affordable product, or choose the costlier, more service-centric experience?
Full Term or Traditional Broker
Traditional “full-service” brokers are known to do a lot more than just assist in the buying and selling of a stock or bond. These brokers to offer a wide range of services and products, including financial and retirement planning, investing and tax advice and typical portfolio updates.
As you get personalized commendations and service, traditional brokerages often come with higher fees, usually charging 1-2% on the assets managed.
Discount Broker
A discount or online brokerage could be a good choice for the cost-conscious investor who loves to go it alone. These brokerages will typically not offer investment advice, though it’s quite common for a discount brokerage to offer free research and educational tools to help investors make sound investment decisions.
Discount brokers come in all shapes and sizes. Some are known to feature better investing tools than others, but charge higher fees, while others might give only the basic broking services, but charge the lowest fees.
With discount brokers, you can either perform a trade on web automatically through a computerized trading system or call in your order with a broker over the phone.
How to invest in stocks?
Online trading has made stock investing a lot more appealing. Why? Because investing online simply means, person is buying & selling shares on their own. It awards more control.
Online brokers make it tremendously easier to place an order and execute a trade to buy stocks. Once you get a brokerage account, you’ll just need to understand the stock’s ticker symbol to run the trade.
Brokers allow investors to place two different types of orders when you buy stock:
Market order — This refers to an order that will be put instantly at the dominant market price. Therefore, if you give an order to buy 10 shares of XYZ, your trade will be submitted by matching it with any other investor who wants to sell shares of XYZ, although not at a disclosed price per share.
Limit order — A limit order is different from a market order in that the trade is only done at a fixed price. For instance, if you place an order to buy 10 shares of XYZ at Rs. 70 each, the order will only go through if the broker can fill at it at a price of Rs.70 per share. Limit orders are an excellent way to buy and sell stocks for those who trade less frequently, as there may not be sufficient number of interested sellers to fill a market order at a sensible price.
Limit orders are found to be most suitable for beginning investors as they get a chance to buy stocks at a specific price.
How to choose the right stock broker for beginners
For an easier understanding, here is a list of important aspects that one need to look into while searching from various brokers.
- Low commissions — Price isn’t the sole aspect to barge on, however, it is necessary to look for brokerage firms that offer low commission prices on stocks, options, mutual funds, and exchange-traded funds. Trades placed through an online brokerage account often cost less, thus investors who are just starting won’t burn a hole to their pocket just to make a trade.
- Possible minimums — One benefit of online brokerage firms is that you can start with small investments. It is advisable to pick brokers that are ready to support clients with small account balances, so that they can grow with the broker over time.
- Fund selection –Look for brokers that offer more than just specific stocks, bonds, or options.
The importance of trading commission
The most crucial concern among new investors in a point is that brokers make their money majorly by charging them a commission to buy a stock or invest in a security. A commission is nothing more than a fee charged to execute your order to buy a stock, bond, option, or fund. However, online brokers typically charge less commission as compared to full-term brokers. This is because they offer their services through web which incur them lesser overheads. Instead, they put in their low costs to attract customers, which is why online brokers can charge a much lower price to execute a trade than a conventional full-service brokerage firm. Employing human brokers to offer services to the clients on stock investment costs money. Since discount brokers bypass this cost, they can pass on the same to customers in the form of lower commissions. An easy rule in the financial setting is that clients pay the brokers’ expenses, so the lower the brokers’ expenses, the lower the fees and commissions.
What is account minimum?
While traditional broking firms and wealth managers often ask for high minimums to begin with, online brokers permit you to begin with relatively small sums. There are few of the discount brokers thatgive the ability to get started with no minimum at all.
For a majority of people, the most difficult step in investing is just getting started, so it is preferred to choose brokers who have a low minimum to open an account and place a trade, so as to avert a possible roadblock on the way to saving and investing.
Brokerage Charges
A few, but not all, brokers charge a fee just to maintain a brokerage account. These fees can vary from “maintenance fees,” which are fees you pay just to keep your account running, to “inactivity fees,” which are charged if you fail to make a specific amount of trades every year.
As commission prices have gradually reduced over time, fees you deposit for maintaining an account are sluggishly declining and vanishing, too. As the key benefit of any discount broker is competitive costs, online brokerage firms have done away at the fees they charge for maintaining an account.
How to open a trading account?
If you want to trade only in futures and options, then demat account may not be needed. However, if you intend to trade in equities, you need to have a demat account. It does not make any difference even if you only want to trade on an intraday basis.
Normally, the broker documentation involves opening a Trading cum Demat (TCD) account. Most brokers will waive off the account opening charges for demat account but there is generally an annual maintenance fee (AMC) that will be charged. There are no charges for your trading account opening.
Documents Required for Opening an online Trading Account
You need to provide your PAN card as the basic document for opening an online trading account. Additionally, you also need to provide proof of identity and proof of residence as per the formats prescribed by SEBI.
Proof of Identity:
Statutory documents with a photograph are accepted as proofs of identity, like:
- Passport
- Voter ID card
- Driving license and
- Aadhaar card etc.
Proof of Address:
For proof of residence you can provide
- Telephone bill
- Electricity bill
- Water bill
Hopefully, the above given information would help you make your first investment decision with ease. Please note that we always delve deeper to bring you nothing but the best of the available information.