You have the money to invest and wish to be secured, and make profits, but the question is where to invest? Majority of the people who do not wish to take risk, would suggest, investment in fixed deposits, insurance and mutual funds.
Very rarely, people will advise you to opt for equity markets directly. As such, equity investments are risky, and fluctuating, whereby one day you reach the sky and another day you are buried in the ground. So question here is how do we be safe in investing in equities.
Though paper format do exists, but if you wish to buy and sell the shares, one needs the electronic format. A Demat account can be opened with any of the brokerages like ICICI Securities, HDFC Securites, Sharekhan etc. The brokerage house is called the DP participant and the DP participant registers your stocks with NSDL or CDSL, a system mandated for the security of your investment
Points to keep in mind while opening a Demat Account:
As said before, we need to open an account with a DP or broker. Here, we need to research which particular broker we need to stat with. Research because the market is filled with brokers, and so a little caution is needed. As such, the broker or DP, must be registered with Securities and Exchange board of India (SEBI) so that any trading that one does with a DP participant is automatically registered with NSDL or CDSL. So after executing a trade you will be informed by mail by the DP as well as NSDL and CDSL.
Nothing comes free. As rightly said, the DP, may charge you for maintaining your account, known as Annual maintenance charges. Though few brokers do not charge you for the same, as they wish to attract more customers. Though every broker would charge you the trading fee. Check the rates and then start an account with them.
3. Bank Account
As mentioned, share trading is an electronic form of investment. So linking a bank account is extremely necessary. This is for 2 major reasons, one, the trading money that you need, would be used from the bank itself, and secondly, the returns or profits you make after selling of the shares would also reflect directly to your bank account. But a word of caution here, I suggest, open a separate bank account, maintained with a minimum amount only for such trading, so that you can keep a track and your broker too wont know about your savings.
God forbid in case of misshaps, your shares would be transferred to the person you have nominated. Make a thoughtful decision on the nominee.
As such this is an electronic medium investment. And hence, being electronically connected via internet, phone and other medium is necessary. A log in and password must be maintained by you, and must not be shared, so that no trading instructions are given by anyone else.
Though, what has been mentioned above, can be found on Google at the click of a button. But as an investor few words of caution would be, a detailed discussion with investors who are trading in stocks since long, as they are already into the investment and would have a better understanding.
Do not invest in shares of a company on the basis of tips given to you by friends. Better would be to study the performance of the company in the long run and only then invest.
Also if you do not want money immediately, go in for a long term investment.