Minimum Age To Invest In Stock Market In India: To do almost anything today, you must have some qualifications. Even if it doesn’t take you to the top position, it’s necessary to have a certificate to get you through the front door.
This is the reality for most jobs in India and throughout the world. For the investing community, this is not an entry barrier.
But, there are specific requirements to becoming an investor, such as having a Demat account and falling within the minimum age to invest in stock market in India.
Eligibility To Invest
Investing is not exactly like your regular job, as it doesn’t require you to have a college degree or work experience. But it does have certain eligibility requirements, like having a Demat account, a PAN card, and a bank account.
A Demat account holds all your securities such as stocks, ETFs, and mutual funds in a dematerialized format. Hence the term “Demat”. Such an account is necessary for investing and trading shares on the stock market.
Eligibility Criteria To Open A Demat Account
These are the requirements that must be met to be eligible for opening a Demat Account –
1. Age
The minimum age to invest in stock market in India is decided by when an individual can open a demat account. Most people believe that you need to be at least 18 years of age to open a demat account but that is not entirely true.
You can open a demat account even if you’re under 18. But a minor opening and using their own demat account is only possible through parents or a guardian.
They can open and operate the account on the minor’s behalf, after providing all the required documents.
When the investor does turn 18, the depository will send a notification to them, so that the account can be transferred, from parent/guardian to investor.
2. KYC
KYC stands for Know Your Customer. It involves all the documentation required to confirm that the person opening the demat account, is really who they say they are on paper.
KYC Verification in India is a crucial step for investors, ensuring compliance by confirming identities through documents such as PAN cards, Aadhar, etc.
Required documents For Demat Account Opening
In order to initiate the process of opening a Demat Account, you must furnish the required documents as outlined below –
1. Identification Proof
ID Proof could be any one or more of the following documents – PAN Card, Aadhar Card, Driver’s License, Passport, etc. Besides this, you would also be asked to submit two passport-size photographs of yourself to the brokerage firm opening your Demat account.
2. Address Proof
Certain documents such as Aadhar contain everything required by the depositories and brokerage firms to open your Demat account, including address details.
Alternatively, you can also submit your Driver’s License, electricity bill, rental agreement, or ration card as proof of your residence.
3. Income Proof
Now some of you might be confused reading the sub-section titled – “Income Proof”. Note that it doesn’t apply to individuals who are interested in equity only.
But if you are required to furnish income proof, you will need to show any one of the following –
- Income Tax Returns Scan Copy
- ITR Acknowledgement
- Net Worth Certificate by a Chartered Accountant
- Digital Copy of Audited Annual Accounts from a Chartered Accountant
- Bank Account Statement showing earnings in the past half year.
Why Is There A Minimum Age To Invest In Stock Market In India?
While investing and trading don’t have educational qualification barriers, it does have an age barrier for entry. Let’s take a look at why this is necessary i.e. why you need a guardian:
1. Stock Market Education
The age entry barrier has valid reasons, one of them being education. Stock market and financial education are not a part of the current school curriculum.
So unless the individual is particularly interested in entering the field of investing and trading, he will not have enough general knowledge about the markets through general school education.
Platforms like Fingrad can educate new and upcoming students about investing and trading.
2. Risk
Assuming you’re actually 18 years old or younger and want to trade and invest, means that you’re a dependent and the capital you need is being funded by your parents or guardian.
Combining the lack of stock market knowledge and experience with the added risk of your parent’s capital, one can understand the need for age-specific barriers to the stock market.
Another reason why there are age restrictions is contract. Minors are not allowed to sign contracts, and if they do, they are basically null and void in the court.
Trading in stocks involves actual contracts. Legally speaking, minors lack the necessary knowledge to fully understand what they are signing, so they have to be of the right age to get into contracts of any kind.
Also Read: All About Harshad Mehta’s Brother – Where is Ashwin Mehta Now?
In Closing
It is a positive attitude to enter the market early, studying and learning about the markets, including macroeconomics, fundamental statement analysis, and studying cash flow statements could give you an edge.
If you are truly interested in investing early, then you can educate yourself on everything you need to know and gain an edge over your peers in the long run.
We hope this article answered your questions and gave you an understanding of the minimum age to invest in stock market in India. Happy Investing!
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