Best Stock Broker for Beginners in India

Best Online Stock Broker for Beginners in India:

A stock broker account enables you to invest in stocks, mutual funds, IPO and bonds. Finding the best brokerage firm in India for stocks is challenging especially if you are a beginner.

There are two types of stock brokers in India; full-service stock broker and discount stock brokers . The full-service brokers provide local support, trading tip and hand-holding to the customers. The online discount broker offers 'do-it-yourself' stock trading. They charge very low fees (60% to 90% in the saving of fees and taxes).

A discount stock broker offers online trading in India. They offer the best online trading  platform in India. If you can trade by yourself using the mobile app or trading website, it is recommended choosing a discount broker.

If you are a beginner, you should consider 2 important charges; Demat AMC and brokerage charges for equity delivery. Below is the list of best discount broker in India for beginners. This list compares the top 10 stockbrokers who charge less and provide excellent online stock trading services.

Best brokerage firm in India for stocks in 2020:

Rank	Broker	Demat AMC	Brokerage (Equity Delivery)	Active Clients
1	Zerodha	₹ 300	₹0 (Free)	17,46,614
2	Upstox	₹ 300	₹0 (Free)	7,29,858
3	5paisa	₹540 (charged as ₹45 per traded month)	₹20 per executed order	5,34,655
4	SAMCO	₹ 400	₹20 per executed order	57,435
5	Alice Blue	₹ 400	₹0 (Free)	50,803
6	Master Trust	₹ 300	₹0 (Free)	39,880
7	TradeSmart	₹ 300	₹15 per executed order	27,104
8	Tradeplus	₹500 (5 years)	₹0 (Free)	16,392
9	SAS Online	₹ 200	₹ 0	13,621
10	Wisdom Capital	₹999 (Lifetime)	₹9 per executed order	7,472

Graphically:

Discount Brokerage vs. Full-Service Brokerage

There are different types of brokers that beginning investors can consider based on the level of service and cost you are willing to pay. A full-service, or traditional broker, can provide a deeper set of services and products than what a typical discount brokerage does. Full-service brokers can give their clients financial and retirement planning as well as tax and investment advice. These additional services and features usually come at a steeper price.

If you are looking for a cheaper, more hands-on approach, a discount broker is a better choice. Discount brokers offer low-commission rates on trades and usually have web-based platforms or apps for you to manage your investments. Discount brokers are cheaper, but require you to pay close attention and educate yourself. Luckily, most discount brokers provide educational resources to help you learn to trade and invest.

How to Pick a Stock Broker

To choose a stock broker you must ask yourself a series of questions. 

These include:

 Am I a beginner? 

How much can I afford to invest right now?

 Am I a trader or an investor? 

What kind of assets would I like to invest in?

There are quite a few things to consider when going through this process.

Is My Money Safe in a Brokerage?

All brokerages operating within the U.S. are required to have $500,000 of SIPC protection, which includes a $250,000 limit for cash. This means that any holdings with a brokerage that exceed $500,000 could be lost in the event that a brokerage goes bankrupt or is liquidated. That said, retail investors, especially beginners, are unlikely to have accounts that exceed $500,000. Therefore, there's little cause for concern when it comes to the security of your money in a brokerage account.

Can I Withdraw Money From a Stock Broker?

Withdrawing your money from a brokerage is relatively straightforward. When you have money in a brokerage it is generally invested into certain assets. Sometimes there is cash left on the side that is in the account but not invested. This excess cash can always be withdrawn at any time similar to a bank account withdrawal. The other money that is invested can only be withdrawn by liquidating the positions held. This means selling the assets that you purchased like stocks, ETFs, and mutual funds. Once sold, you can withdraw that cash.

Terms for Beginners to Know

Anyone who would like to get involved in the stock market should know some basic terminology:

• Stock: A stock (also known as "shares" or "equity") is a type of security that signifies proportionate ownership in the issuing corporation. This entitles the stockholder to that proportion of the corporation's assets and earnings.
• Price-to-Earnings Ratio- P/E Ratio : The price-to-earnings ratio (P/E ratio) is a ratio for valuing a company that measures its current share price relative to its per-share earnings (EPS). The price-to-earnings ratio is also sometimes known as the price multiple or the earnings multiple.
• Market Capitalization: Market capitalization, commonly referred to as "market cap," refers to the total dollar market value of a company's outstanding shares. Market cap is calculated by multiplying a company's shares outstanding by the current market price of one share.
• Dividend: A dividend is the distribution of reward from a portion of the company's earnings and is paid to a class of its shareholders.
• Exchange-Traded Fund (ETF) : An exchange-traded fund (ETF) is a collection of securities—such as stocks—that typically tracks an underlying index.
• Bond : A bond is a fixed Income instrument that represents a loan made by an investor to a borrower (typically corporate or governmental). A bond could be thought of as an I.O.U. between the lender and borrower that includes the details of the loan and its payments.
• Mutual Fund: A mutual fund is a type of financial vehicle made up of a pool of money collected from many investors to invest in securities such as stocks, bonds, money market instruments, and other assets. Mutual funds are operated by professional money managers, who allocate the fund's assets and attempt to produce capital gains or income for the fund's investors.
• Limit Order: A limit order is the use of a pre-specified price to buy or sell a security. For example, if a trader is looking to buy XYZ’s stock but has a limit of $14.50, they will only buy the stock at a price of $14.50 or lower. If the trader is looking to sell shares of XYZ’s stock with a $14.50 limit, the trader will not sell any shares until the price is $14.50 or higher.  
• Market Order: A market order is a request by an investor – usually made through a broker – to buy or sell a security at the best available price in the current market. It is widely considered the fastest and most reliable way to enter or exit a trade and provides the most likely method of getting in or out of a trade quickly. For many large-cap liquid stocks, market orders fill nearly instantaneously.