How to open a free demat account with zero annual maintenance charges - Hindustan Times
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How to open a free demat account with zero annual maintenance charges

Published on May 28, 2024 06:16 PM IST

Embrace equity investing with Lemonn's zero-AMC demat account. Save on fees, enjoy curated stock portfolios, and invest for a year without annual charges.

Lemonn offers free demat accounts with no annual charges for a year.
Lemonn offers free demat accounts with no annual charges for a year.
ByHT Brand Studio

Driven by India's growth story, retail investors have wholeheartedly embraced equity investments such as stocks and mutual funds in the last few years. For perspective, there has been a nearly three-fold rise in demat accounts to 140 million between 2019 and 2023, boosting demand for trading apps such as Lemonn, Zerodha, and Upstox. To be sure, the rise in the number of demat accounts is a big step forward in fostering financial inclusion in India.

Lemonn offers free demat accounts with no annual charges for a year. Yet, new investors would do well to understand what a demat account is, why you need one, what demat account maintenance charges are, and so on. Let’s dig in.

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Understanding Demat Accounts

The Indian middle class’s love for equity investing first manifested during the pandemic, has remained largely intact, though the virus is now a distant memory. The number of investors registered with the National Stock Exchange swelled from 31 million in March 2020 to 40 million by the next 12 months. What’s more, the numbers have more than doubled since. The Indian stock markets are scaling new highs every week. The India benchmark Nifty50 gave an annual return of over 19% in 2023. The Indian stock market rally is phenomenal, and anyone who wants to be a part of the rally needs to have a demat account.

A demat account, or dematerialized account, is an electronic account that holds all your shares, bonds, debentures, and mutual funds in digital format. Physical share certificates are no longer valid in India, and shares need to be issued, held, and traded in a dematerialized or digital format.

A demat account is similar to a bank account, but shares are held in a dematerialized format instead of money.

Let’s understand the functioning of a demat account with an example.

You want to purchase shares of Company A. When you buy the shares of A, the shares will be transferred in your name. Before demat accounts became the norm, the buyer of the shares received a physical, i.e., a paper-based share certificate from the exchange stating your name and the number of shares held in the company. The National Stock Exchange (NSE) introduced the Demat Account system in 1996. Today, the NSE and the BSE follow the Demat Account system completely, switching to a paperless system.

The first step to buy or sell shares is opening a demat account.

Understanding Demat AMC

Demat account stores your shares/securities in a secure digital format. Brokerage firms and financial institutions provide demat account opening and maintenance services. Providing secure demat account maintenance and management services is a cost for brokerage firms and financial institutions. It requires huge investments in technology infrastructure, not to mention account maintenance, transaction processing, and other administrative expenses.

Demat accounts levy AMC or annual maintenance charges (AMC) to recover the costs incurred by brokerage houses. The AMC fees are recurring and can be charged quarterly or annually, depending on the service provider.

The demat AMC charges may seem nominal if deducted every quarter but can add a lot over the years for long-term investors. Therefore, investors should opt for a free AMC demat account where available. The Lemonn app, a relatively new entrant into stock broking, helps investors save on demat AMC charges as it offers a free demat account with no annual charges for all users for a year.

How a Zero AMC Demat Account Can Help You Save Money

Most brokerage houses levy demat AMC charges for account management and maintenance services. The fee charged will depend on the brokerage firm. The AMC fees can add up to a lot over the years for long-term investors. Therefore, investors should opt for a free demat account without AMC to save on the costs. Here are the benefits of a zero AMC demat account.

Cost Savings

Investors can save some amount by opting for a free demat account with no annual charges. The money saved means more money for investment.

Encourages Long-Term Investing

Demat AMC charges are recurring in nature and deducted at regular intervals. These charges can deter long-term holding as you will have to pay the charges for your entire holding tenure. A zero AMC Demat account will encourage you to hold your security for the long term, which is crucial for wealth creation.

Ideal For Small Investors

Zero-maintenance demat accounts can be a game changer for small investors. They incentivize small investors to invest in the market without worrying about recurring expenses. Thus, a zero-charge demat account democratizes investment by making it accessible to all.

Why Open a Demat Account with Lemonn?

The Lemonn app from PeepalCo offers a free demat account with no annual charges to all users for one year. Here are some of the benefits of a zero AMC demat account and why you should opt for Lemonn:

Choose from a curated portfolio of stocks

Investments are subject to market risks, and investors are advised to read all related documents carefully. Lemonn understands that it is easy for investors to get lost in the plethora of information available. Lemonn’s analyst rating feature uses financial market data provider Refinitiv, and apart from Buy/Sell/Hold, they also provide recommendations on exit price. What’s more, Lemonn’s ‘Invest in Ideas’ feature gives you a curated portfolio of stocks to select from diverse sectors, such as railways, EVs, automotive, PSU stocks, and high dividend stocks.

No paper certificates

All stock market investors and traders need a demat account. Physical share certificates are no longer valid, making demat accounts mandatory. A zero AMC Demat account will give you all the perks of a demat account while helping you save money.

Holds a Variety of Financial Instruments

A demat account can hold many investment instruments besides stocks. Mutual fund units, corporate bonds traded on the exchange, and ETF investments can all be held in digital format in a demat account. Therefore, a demat account with the Lemonn app will give you a holistic view of your investment portfolio.

Facility for Nomination

Nomination is an important part of the financial planning process. The depository prescribes the nomination process, which investors must follow. The nominee or nominees will receive the investor's holdings according to the prescribed norms.

User-Friendly Platform

Most investment platforms available in the market are built for seasoned investors, making them difficult to use for lay users. The Lemonn app is built for the common man. Lemonn app simplifies complicated data to make investments easy to understand, which is reflected in its vision of making money equal for all.

Documents Required to Open a Demat Account

Opening a zero-maintenance demat account is easy with Lemonn. You will require the following documents to open your free demat account with no annual charges.

Identity proof: Government-issued photo IDs such as Aadhaar card, Passport, Voter ID, PAN Card, Driving License, etc.

Proof of Address: Documents containing addresses, such as an Aadhaar card, passport, utility bills, bank statements, or rental agreements as proof of address can be used as address proof.

PAN card: A PAN is mandatory to open a demat account.

Passport-size photographs: It is best to keep a few recent passport-size photos ready while opening a demat account.

Bank account details: To open a demat account, you will need details such as the bank account number, IFSC code, and a canceled cheque.

Tips for Choosing the Right Demat Account

A demat account is as important as your bank account. Here are some tips for you to choose the right platform for your demat account:

Compare AMC Charges

Not all demat accounts are free AMC demat accounts. Therefore, you should compare the AMC charges of brokerages to do a cost/benefit analysis.

Understand Brokerage Charges

Besides demat AMC charges, brokerage is another significant cost associated with equity trading. Check the brokerage structure of the firm before opening a demat account. Lemonn offers zero AMC demat accounts and zero brokerage for a year. No brokerage can save a lot of money for equity traders.

Consider Value-Added Services

Value-added services such as analyst ratings and thematic curation of investment baskets should be considered before selecting a brokerage firm to open your demat account.

Assess the Account Opening Process

The account opening process should be seamless. A lengthy, complicated process might discourage you from opening an account.

Strong Customer Support

While most brokerages have robust and secure processes in place, it's a good idea to check for the quality of customer support. Dedicated customer support can help you resolve your queries in case of problems or glitches.

Conclusion

A free demat account with no annual charges is a boon for equity investors and traders. It will motivate the investor to stay invested for the long term, as there are no AMC charges. Log on to the Lemonn app today to open a zero-AMC demat account and save on brokerage charges for a year.

Disclaimer: This article is a paid publication and does not have journalistic/editorial involvement of Hindustan Times. Hindustan Times does not endorse/subscribe to the content(s) of the article/advertisement and/or view(s) expressed herein. Hindustan Times shall not in any manner, be responsible and/or liable in any manner whatsoever for all that is stated in the article and/or also with regard to the view(s), opinion(s), announcement(s), declaration(s), affirmation(s) etc., stated/featured in the same. The article does not constitute financial advice.

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