Thursday, December 1, 2016

direct investment

Direct investment involves an individual investor studying the company/ies in which the investor wants to invest in and accordingly engaging in buying and selling of the stocks of a company. For this, the individual investor is required to have a bank account to receive direct credits such as dividend given by the company into his bank account, a trading account with a registered broker/trading member of a stock exchange through which he/she can directly buy and sell the stocks that he is interested in and a demat account opened with a Depository Participant (DP) of a Depository to hold the stocks in the demat account.

The stocks are held in the name of the investor and are held in his/her demat account. The cost of transaction as well as other statutory charges such as the securities transaction tax, service tax etc. associated with buying and selling stocks are borne directly by the investor.However , it should be noted that creating and managing a portfolio requires time, knowledge and skills which is usually beyond the capability of most investors.

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