A Detailed Comparison Of A Full Time Broker And A Discount Broker
Most people encounter this confusion once they open a demat account. In fact this account can be split into a couple of categories that are full time brokers and a discount broker.
The definition of a full time broker
They are also referred to as traditional brokers and roll out a bundle of services. Not only are they going to provide a trading platform for research or advice, sales along with asset management under a single umbrella. The onus lies at the end of an individual which depends upon the requirement and offering of the stock broker.
With a traditional broker there is an online and an offline service. Since such brokers offer a variety of services their charges tend to be on the higher side. They are going to charge you on a percentage basis that is on the basis of every trade executed. Say for example if you are investing Rs 100,000 and the brokerage is 0.3 % then Rs 300 is the brokerage for every transaction that you would be paying
The definition of a discount broker
With digitalization ruling our world in a big way the use of internet has also increased. By the internet revolution it gave birth to discount brokers. As compared to the traditional brokers they do not have any form of physical presence and operate via an online platform. Such brokers are not going to provide you with investment advice as a form of service, though they might provide you with research along with educational tools. In fact it works out to be more of a do it yourself platform. The best discount broker in India 2019 is of the opinion that in order to avail their service you need to have a minimum knowledge on how to trade.
The tipping point of these brokers is the low commission rates that they offer. In comparison to the traditional brokers is low and sometimes it can be as low as Rs 20 per trade.
For example if you are planning to invest Rs 100,000 then the brokerage would be Rs 20 irrespective of the volume you end up trading. Even if you invest 500,000 this works out to be the same.
Which type of broker suits your needs?
After doing an in depth study of both the class of brokers it has been found out that both of them do have their own set of pros along with cons. Eventually it boils down to the type of investor you tend to be.
For a newbie who has just entered the market or even trying to make his feet felt in the market, then a traditional broker would be a better choice. The reason being they are bound to provide advice about the stocks. On the other hand if someone is an expert then a discount broker would satisfy your needs. The main benefit of such a broker is low rates of commission.