In the world of investing, the broker plays an important role without which the stock market would be a handicap Stock broker. With the evolution of time, the presence and importance of the stock market are proliferating and with it, the demand for stockbrokers is also rolling up. Due to the uncertainty of the various businesses, due to the rapid changing of the market environment, people think it wise to have a second source of income and investing in stocks seems most felicitous.
According to the latest statistics, India has been ranked 5th most country in terms of growth of the economy leaving behind many other big countries. As India is still in a developing stage, the demand for stock brokers in India is pacing up every year. The role of the broker is that of an intermediary between the buyer and the seller. The broker acts as a ‘buyer to the seller’ and ‘seller to the buyer’. The broker ensures that there is enough `bid’ and `ask’ to ensure that there is enough liquidity in the financial markets.
If a person wants to invest in the stock market he/she has to find a broker this is the first step. After that, the broker will open a Demat account for trading of shares with whichever company he works for. Only the brokers registered with SEBI ( SECURITY EXCHANGE BOARD OF INDIA) are allowed to open a Demat account of the clients. After the person opens a Demat account with the broker he/ she can start the transactions. The Broker first has to analyze various factors such as the return expected by clients also whether the client is risk-averse or a risk seeker. Sometimes the broker has to analyze all these factors on his own simply by looking into straight facts.
For e.g. generally, a client who is at his/her old age or near retirement will be more risk-averse and wants to have a decent return with low risk whereas the people in the early ’30s or young people will be risk seeker and wants to earn a higher return. As the basic rule of investment: Greater the risk, greater the return. The broker will then advise whenever an investment opportunity comes keeping in mind the client’s risk and return preferences. The broker charges a nominal fixed percentage as fees and sometimes incentive fees or generally some percentage of profits if the returns are above a certain benchmark return i.e. hurdle rate or high watermark clause. The brokerage charged can vary according to the clients and client risk and return requirements.
Brokers demand in India is increasing at pace. Though brokers charge a minimum percentage as brokerage it significantly decreases the number of returns earned by the clients if the returns cross the benchmark return i.e. the hurdle rate. So selecting a brokerage firm which charges the minimum of a brokerage should be selected. Wisdom capital is one of the most valuable and trusted companies in India right now which charges 0% brokerage and provides the best investing experience to the customers with its services.