Investing in the stock market can be gratifying and risky or unrewarding, as there is no sure-shot formula to make a quick-buck owing to the volatility which leads to confusion amidst investors, as seen in the recent times. But that does not down our spirit to explore the stocks in the market through long-term or short-term investments. So here is a quick-list of things you can keep handy before signing the dotted line.

Pancard

An important document which is issued by the Income Tax Department to ensure individuals are paying their taxes on time on all transactions made. The department keeps a detailed descriptive record of all your major transactions, thus it is necessary to have a pancard handy before you invest in any financial instrument. Now if you are a Non-resident Indian (NRI) you would then have an Overseas Citizen of India card, or a Person of Indian Origin (PIOs), using this you are eligible to apply for a pancard, under the purview of the Income Tax Act 1961. A pancard is mandatory for all investors as now it is a valid identity proof across the country.

DEMAT account

A demat account is similar to your regular bank account, but here you hold your securities instead of money. For transparency and efficiency reasons it’s mandatory to have a demat account as all the buying and selling happens through here. Your worries like mutilated share certificates, postal delays and counterfeit shares are shredded away, if you trade through a demat account as it is a simple and economical way to deal with online transactions. Your demat account is linked with your regular bank account in order to facilitate paying in and out of funds and securities.

Know Your Customer or (KYC)

As the name suggests the financial institute or banks need to put in place a policy framework to know their customers before opening any account. Initially it was mandatory for customers who were looking to invest `50,000 or more, but after January 1^st, 2011 it’s become mandatory for all customers. It’s done purely to prevent money laundering, through various illicit channels, as bank details, PAN card, residence proof are captured through KYC to ensure genuineness of the investor and traceability, if need be.

 Unique client IDs

Once your demat account is opened and active, you will be allotted a unique client ID, which helps in identifying your placed trade calls. All regulations including your trades, the account balance and other records are chronicled under this ID. So each time you trade, the transaction statements will be sent to you. You can begin trading once the registration process is completed.

 To sum up

Once all of your documentation is in place you can begin trading through your demat account. The limit will fully depend on the balance you maintain in the account. If you face a loss, you may have to put in some fresh money from the linked-bank-account, and if there is a profit, it can be transferred in to your bank account within 48 hours. But remember, while you are trading it is important not to panic or time the market.

 This is a partnered post.