India’s phenomenal digital adoption has had a direct impact on its securities and exchange industry. And why wouldn’t it? Benchmark indices such as Sensex and Nifty have extended a return of around 50% over the past 4 years. The Indian bourses are showing a sustained momentum – backed by initiatives like ‘Make in India’ and ‘Atmanirbhar Bharat’ – and more retail investors want to grab a pie of this cake.
So, if you’re one such investor ready to enter the world of stock investments, here are five reasons why you should go with a digital broker:
1. Trading Platforms
The biggest reason to choose digital brokers is that they offer you an intuitive platform for trading. An offline broker can give you stock recommendations. However, you will find it hard to conduct your own research before investing in those stocks. So, you will either have to satisfy yourself with surface analysis or trust your broker blindly altogether. This approach further introduces the challenge of speed, thereby leading to non-optimal prices during both buying and selling.
All of these problems get instantly resolved as and when you tap a digital broker. Such brokers typically offer advanced charting features, market scanners, and mobile trading application. These factors make digital brokers invaluable to an investor. Do check if there is any fee charged by the broker on any of its trading platforms.
2. Trading Costs
Another important factor to consider digital brokers is the trading cost. The trading cost includes everything from brokerage and transaction charges to AMC, Demat charges, and taxes. Now, there are two methods by which the trading cost is computed. The most popular of them is the percentage-based brokerage, wherein you have to pay a predetermined percentage of the over trade value (while both buying and selling). Offline brokers – and some digital brokers as well – use a percentage-based brokerage that turns out to be less lucrative for investors.
However, leading digital brokers charge flat, fixed brokerage wherein a flat fee is charged on the trade order irrespective of its overall value. Some digital brokers even have zero brokerage charges for equity delivery. Such factors make a sizeable difference in your overall earnings.
3.Research Capabilities
In today’s digital age, data is the new oil and gold. It makes all the more sense in stock markets where stock prices depend on wide-ranging data – including financials, market performance, quarterly results, promoter shareholding pattern, regulatory measures, geopolitical developments, investor sentiment, and so forth. Since technology is a forte of digital brokers, they usually come equipped with advanced research capabilities. Some cutting-edge digital brokers have even developed investment engines that analyze more than 1 billion data points before extending a recommendation. Imagine an offline broker doing that!
4. Margin Leverage
Margin trading is something that enables you to trade much more than your original investment. It is a facility mostly used by day traders and brings a tangible difference to your overall profits. However, if you are new to stock trading, you must first understand the risk of margin trading. If things go awry, you can end up losing all of your investment. It is a facility that must only be used by a seasoned trader while understanding the associated risks.
5. Customer Services
Last, but not least, digital brokers offer you the best of services wrapped within their touch-of-a-button experiences. Some of them include Online Customer Care Representatives, Relation Managers, and 24x7 Customer Helpline numbers. Value-driven brokers further curate research materials for their investors and issue personalized advisories. You must also look forward to services like webinars, podcasts, and other relevant customer-centric initiatives.
With the ever-increasing participation of retail investors in India alongside positive business outlook, it can be said that Indian bourses have not even scratched the surface yet. While they grew around three-times between January 1999 and January 2009, they nearly quadrupled in the next 10 years. Imagine where they will be 10 years from now. Invest wisely!