TRADITIONAL BROKERS VS DISCOUNT BROKERS
As per SEBI, a common man cannot buy or sell stocks directly from stock exchanges, hence they need a DEMAT ACCOUNT to perform any transaction.
There are mainly two types through which we can open a Demat account, one is approaching the whole package traditional brokers and the other is approaching the new and rising discount brokers. We must select a broker which caters to all of our needs and matches and helps us achieve our investment and financial goals
Let’s discuss both of them separately, starting with the fresh concept of a discount broker.
A discount broker is a stockbroker or a brokerage house which charges discounted commission and particularly deals in just facilitating a financial transaction.
There are many discount brokers which are present in India, such as Zerodha, Upstox, Groww and many more. These brokers mainly function due to the presence of the internet as these are tech-enabled houses.
The main features of discount brokers are :
Limited Services: These brokers mainly offer services like the execution of the order, and pricing of commodities. Their services are limited as they just act like intermediaries. They fail to offer services like wealth management, personalised relationship manager and other important services.
Lower Brokerage: Discount brokers mainly charge lower brokerage than traditional brokers, as they offer limited services.
Nil or Very Less Offline Presence: Discount brokers mainly have a very less offline presence as these exist on the internet and operate in the digital world.
Who should go for discount brokerage?
Ideally, investors who already have experience with investing and trading in different asset classes should opt for discount brokers as these brokers don’t provide any research on their end and charge less brokerage.
Digital-Friendly people who are familiar with the tech are suggested to take services of discount broking as entering into the financial markets has been easier with the digitalisation of stock markets.
If you want to open demat account with such broker, click on the Upstox link to open account-
A traditional broker is a full-fledged service provider broker. It offers all services from research to stock recommendations. A traditional broker has mainly an offline as well as online presence.
There are prominent traditional brokers present in India. One of these is ShareKhan which is the 6th largest traditional brokerage house in India. ShareKhan offers various services like equity research, stock picks and recommendations, personalised wealth management and much more.
The main features of traditional brokers:
Relationship Manager: A relationship manager is provided by the brokerage houses which guide you on how and where to invest your hard-earned money.
Personalised Services: Unlike discount brokers, traditional brokers offer better services and personalisation as per the client’s needs like stock recommedations, research reports ,call-on trade etc.
Offline and Growing Online Presence: These brokers have offices as well a dedicated app to do trading or investing.
Margin trade funding: It is a facility under which you buy stocks that you can’t afford. You are allowed to buy stocks by paying a marginal amount of the actual value. This margin is given either by pledging our existing shares, mutual fund or by providing loan against some interest.
Who should go for traditional brokerage?
People who are just entering into stock markets and do not have any prior experience in trading or investing, then they should opt for traditional brokerage.
Let’s say you have no time to learn about financial markets, investing or anything related to finance. Then you can approach traditional brokers and let them handle your money. Moreover, you have facility to do face to face conversation with branch person in office.
Link to open Sharekhan account-
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Before you approach either of them, here are some differences that might help you select your preferred broker type-