Annual Maintenance Charges or AMC is charged in order to maintain your Demat account. The amount of AMC that you have to pay depends on the stock broker you are with. It ranges from Rs150, most charge Rs 300 and some even charge as much as RS 800/900 going upwards from the second year, depending upon the type of demat account you choose- individual or joint accounts, NRI demat accounts, demat and trading accounts or 3-in-1 accounts. There are brokers who allow lifetime free AMC to the customers without any terms and conditions.
Often, as compared to discount brokers, full-service brokers charge a higher amount of AMC. The price for your Demat AMC does not depend on whether you hold shares in your Demat account or not. This fee has to be paid for the maintenance of your accounts, regardless of whether you are an active investor or not, or whether you do positional trading or intraday trading. Unless you are with some broker that charges Zero AMC.
Brokers often waive off AMC for the first year and charge AMC from the 2nd year onwards. Some charge zero AMC services to the account holder who has no shares in the account till the purchase of first share.
If you have not paid the Demat account AMC for a longer time, you may face situations mentioned below.
1 Until you have made the deposit to clear the remaining balance, the account will be locked and you will not be able to access it.
2 Every year, the demat account will continue to rise until you are able to finalize the payment to clear the outstanding balance.
You should pay off your AMC as soon as possible. If you no longer use the Demat account, it is advisable to ask for closure.
Full-service brokers Vs discount brokers- What’s the difference?
Full-service brokers provide you every possible assistance and information relevant for your trading purposes. You get the entire kit with a full-service broker. In simple words, someone else controls your investment portfolio for you, making a decision on your behalf. In the past, full-service brokers were the only choice and could cost a lot of money for each transaction.
But today, full-service brokers cost a lot less. However, they also provide investment advice and guidance and handle your investments on your behalf. Expect to pay administration fees on the basis of how much money you have in your account. Generally speaking, full-service brokers charge between 1% and 2% of the assets under control.
Another factor to bear in mind is that many full-service brokers need account minimal. For example- You may need $100,000 or $250,000 in assets if you choose to work with a full-service brokerage company. While some full-service brokers sell services to those with less assets, the relative costs may actually be higher.
On the other hand, discount brokers give you the ability to do a lot of heavy lifting on your own. You have access to online trading platforms that allow you to make your own investment choices. They might also have useful tools, such as stock screeners, to help you determine what works best for you. As long as you know how to use the tools, you can be able to do very well on your own.
Discount brokers offer minimal general guidance, but commissions are much lower. However, discount brokers provide very limited access and information which is not sufficient for a person to understand the vast market and its activities.
When to consider a full-service broker, and get best Brokerage Calculator
You might feel better about getting a specialist in charge of your portfolio. And there are several other advantages that could come with the use of a full-service broker.
Here are some features that could make a full-service broker a better option for you:
• You are dissatisfied with the thought of handling your own investments. For many people, the thought of investing is so frightening that they don”t want to handle a portfolio. If you”re going to be under a lot of tension, it would make sense to turn it over to the professionals.
You have little time to handle your portfolio. There”s a reason so many rich and wealthy people don”t handle their own investments. They haven”t got the time. Being directly involved will take a lot of time. If you want to use your time for something other than fund management, a full-service brokerage service can be of great benefit.
• You”ve got enough money to make it worth it. Some full-service brokers offer discounts if you have a certain amount of money.