The Indian stock market is expanding faster than ever, and more and more Indian and foreign nationals are keen to pour money into various financial assets in the country. It is a common thought that stock investments are mainly for adults. But there are opportunities for minors also.
What is the age limit to invest in the stock market?
Investing in stock markets has no age bar. However, brokers allow individuals who have attained 18 years of age to open demat and trading accounts with a stockbroker. These are the two primary and mandatory accounts in the online trading system where stock exchanges deal in dematerialised securities only. You can enter the stock market with a demat account.
Demat Account Meaning and Benefits
A demat account is a repository to store all your financial assets in the stock market in dematerialised form. It can hold your stocks, debentures, bonds, mutual funds, exchange-traded funds (ETFs), derivatives, insurance policies, and other investments electronically and safely.
After explaining what is demat account, you should know the following key demat account benefits:
- Hold all your financial assets in one place: One can consider diversifying their investment portfolio to reduce the risk and hold all investments in one place.
- Ensure the safety of your assets: Demat services are offered by stockbrokers registered with national depositories that keep your assets safe. It has eliminated chances of fraud, fake securities or delayed credits of securities.
- Long-term holding: You can hold your assets in your demat account as long as you want to maximise returns.
- The faster process to transfer securities: A demat account facilitates the faster transfer of securities in the online trading system.
- Automatic credits: Receive corporate gains automatically in your demat account, like dividends, bonus shares, right-issue shares, etc.
Trading Account and Benefits
A trading account is required to place trade orders in the stock market using an online trading platform provided by stockbrokers. Trading accounts are offered by stockbrokers with advanced tools depending on the segments you want to trade in.
- Easy Trades: Place trade orders without visiting ground-based stock exchanges. Log in on the broker’s trading platform and find the right securities to place orders online.
- Multiple Exchanges: A trading platform is linked to multiple stock exchanges. You can access all exchanges in one place.
- Easy linking: You can link more than one demat account with your trading account. It helps to maintain different investment portfolios to meet different financial goals.
- Safe Transactions: The Securities and Exchanges Board of India has defined security measures for brokers to provide a safe trading platform to their clients. You can transact for investments online with security.
For free demat account opening with a trading account, you can opt for a renowned discount broker.
Eligibility to Open Demat Accounts
- An individual should be an Indian citizen aged 18 years or above.
- Applicants should have the required documents to open their demat accounts – ID proof, address proof, and bank proof.
You can link your bank savings account with your demat and trading account for ease of transacting.
How can minors participate in the Stock Market?
Though there is no minimum age limit for stock market investments, the SEBI has defined certain rules.
Parents who want their children to learn valuable financial management and investment lessons can allow them to enter the stock market.
- If an individual is a minor, they need help from their parents to open a demat and trading account.
- If parents or guardians want, they can invest in the stock market on behalf of minors to grow their money manifold over time.
Some say the stock market requires experience, and it is good to consider stock markets after a certain age. Experience surely counts, but foresight can help to understand the market and make trading strategies.
Thus, anyone can take advantage of short-term or long-term profits in the stock market by opening a demat account online. Using demat accounts, adults, as well as minors can make investments in the stock market. Like most beginners, you can consider investing a small amount and follow the buy-and-hold investments strategy. Discount brokers can offer you a demat account free of cost, and there will be no account maintenance charges also.