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Investment & Trading FAQ — All Your Questions Answered | Finoda
Every week, we get the same questions from investors — first-timers and experienced ones alike. Where do I start? Is demat free? SIP or FD — which is better? How do I apply for an IPO? What's Section 80C again?
So we put it all in one place. This FAQ page covers everything from opening a demat account to filing your ITR. Short answers, plain English, no jargon. And if you want to go deeper on any topic, we've linked the full guides throughout.
Quick heads up — Finoda operates under SEBI's regulatory framework, so all investment activity follows the highest compliance standards. Your money, your securities, and your data stay protected at every step.
Demat Account FAQs
A demat account is where your investment journey actually begins. Before stocks, IPOs, or ETFs — you need one. But most people have at least five questions before they open one. Here are the ones we hear most.
What is a demat account?
A demat account holds your shares and securities in digital form. Think of it like a bank account, but for stocks instead of money. When you buy shares on NSE or BSE, they get credited to your demat account. When you sell, they get debited. No paperwork, no physical certificates — everything is electronic. Read our full Demat Account Guide →
How to open a demat account online in India?
Opening one with Finoda takes roughly 10–15 minutes. You'll need your PAN card, Aadhaar, a bank account, and a selfie. We complete the KYC digitally — no branch visit required. Once your application goes through, you get your account details within 24–48 hours. That's it.
Is a demat account free?
Opening a demat account with Finoda is free. There are no account opening charges. However, an Annual Maintenance Charge (AMC) may apply depending on the type of account and how much you hold. For small investors with holdings under ₹4 lakh, SEBI mandates zero AMC under the Basic Services Demat Account (BSDA) structure. We always walk clients through the exact fee structure before they sign up — no surprises.
Do I need a demat account for SIP?
Not mandatory, no. You can run a SIP through direct AMC platforms without a demat account. But if you're trading stocks alongside mutual funds, having a demat account is far more convenient — everything sits in one place. Most of our clients prefer the unified view. Also, for ETF-based SIPs, a demat account is required.
Mutual Fund & SIP FAQs
Mutual funds and SIPs are where most first-time investors start — and rightly so. Low minimums, professional management, SEBI regulation. Here's what you actually need to know.
What is SIP investing?
SIP stands for Systematic Investment Plan. It's a way to invest a fixed amount in a mutual fund at regular intervals — monthly, weekly, or quarterly. You can start with as little as ₹500 a month. The real power of SIP is compounding: small, regular contributions grow significantly over time because returns also earn returns. We've seen clients start SIPs with ₹1,000/month and build meaningful wealth over 10+ years without ever feeling the pinch. Explore SIP Investment →
Is SIP better than FD?
It depends on what you want from your money. FDs give guaranteed returns — typically 6–8% per annum — with zero market risk. SIPs, on the other hand, can historically deliver 10–14% annualised returns over long periods through equity mutual funds. But that comes with market risk. If you're investing for 1–2 years and need predictability, FD wins. If you're investing for 5–10 years and can handle some volatility, SIP usually wins — by a wide margin.
We don't push one over the other. We look at your timeline, risk tolerance, and goals before recommending anything.
What is NAV in mutual fund?
NAV means Net Asset Value. It's the per-unit price of a mutual fund scheme. When you invest in a fund, you buy units at that day's NAV. When you redeem, you sell units at the NAV on the redemption date. A higher NAV doesn't mean the fund is expensive or a lower NAV means it's cheap — what matters is the fund's overall performance and portfolio quality.
What is a mutual fund?
A mutual fund pools money from many investors and invests it across stocks, bonds, or other assets. A professional fund manager takes the decisions. As an investor, you own units proportional to your investment. It's a great way to diversify without picking individual stocks yourself. See our Mutual Funds page → | External reference: AMFI India — Fund Types ↗
Stock Trading & Equity FAQs
What is the difference between intraday and delivery trading?
Intraday trading means you buy and sell stocks on the same day. Your position closes before market hours end, so you don't actually hold the shares overnight. Delivery trading means you buy and hold — days, months, or years. The shares sit in your demat account. Intraday requires higher activity, sharper timing, and more risk management. Delivery suits long-term investors better. Learn about Intraday Trading → | Explore Equity Trading →
What is NSE and BSE?
NSE (National Stock Exchange) and BSE (Bombay Stock Exchange) are India's two major stock exchanges. NSE is the larger one by trading volume. BSE is the older one — it's Asia's oldest exchange. Both are regulated by SEBI. When you trade stocks in India, you're trading on one or both of these exchanges through your broker.
How much money do I need to start trading stocks in India?
Technically, you can start with just ₹100 — some stocks trade below that per share. But we always tell clients: have at least ₹5,000–₹10,000 before you start actively trading, so you can buy meaningful positions and handle any short-term losses without panic. For SIPs, the minimum is ₹500 per month. There's no good reason to wait until you "have more money" — start small, start now.
F&O (Futures & Options) FAQs
What is F&O trading?
F&O stands for Futures and Options. These are derivative contracts — meaning their value is derived from an underlying asset like a stock, an index (like Nifty), or a commodity. In futures, you agree to buy or sell something at a fixed price on a future date. In options, you get the right (but not the obligation) to buy or sell. Both carry higher risk than regular stock trading and are better suited for experienced investors.
Is F&O trading risky for beginners?
Yes — and we're very direct about this with clients. SEBI data consistently shows that the vast majority of retail F&O traders lose money. We don't recommend F&O for beginners. If you're curious about derivatives, start by understanding equity first. Once you have a solid handle on how stocks move and how markets behave, we'll walk you through the basics of options. Not before that.
IPO FAQs
India's IPO market had a record-breaking 2025 — over 100 mainboard listings and more than 250 SME IPOs, with names like Meesho, Groww, and Tata Capital making headlines. The appetite for IPOs is real. So are the risks. Here's what you need to know.
What is an IPO?
IPO stands for Initial Public Offering. It's when a private company offers its shares to the public for the first time. Investors can apply for shares at the IPO price. If the IPO is oversubscribed (more applications than shares available), you may get a partial allotment or none at all. Once listed on NSE or BSE, the shares trade in the open market.
How to apply for IPOs through Finoda →
What is ASBA in IPO?
ASBA stands for Application Supported by Blocked Amount. When you apply for an IPO, the application amount is blocked in your bank account — but not debited. If you get an allotment, only that amount gets deducted. If you don't, nothing happens to your money. It's the safest way to apply, and it's now the standard method for all retail IPO applications in India.
What is IPO GMP?
GMP stands for Grey Market Premium. It's an unofficial, pre-listing indicator of what investors expect the stock to trade at after it lists. A high GMP suggests strong demand. But GMP is not regulated, not always accurate, and shouldn't be your primary reason to apply for an IPO. Read the company's fundamentals and the Red Herring Prospectus (RHP) instead.
Insurance FAQs
What is term insurance?
Term insurance is pure life coverage. You pay an annual premium, and if something happens to you during the policy period, your family gets the sum assured. There's no maturity benefit or investment component — it's straightforward protection. Because of that, premiums are very affordable. A ₹1 crore cover for a healthy 30-year-old can cost as little as ₹8,000–₹12,000 per year.
Explore Life & Term Insurance →
Do I need health insurance if my employer provides cover?
In most cases, yes — you still need your own health insurance. Employer-provided cover is usually limited in sum (typically ₹3–5 lakh) and only active as long as you're employed. A sudden hospitalisation or serious illness can easily exceed that. We recommend a personal health cover of at least ₹10 lakh, especially if you have dependents.
Loans FAQs
What is a Loan Against Securities (LAS)?
If you hold stocks, mutual funds, or bonds in your demat account, you can pledge them as collateral to get a loan — without selling your investments. This is called a Loan Against Securities. It's one of the smartest ways to access emergency funds or short-term liquidity. Interest rates are usually lower than personal loans, and you continue to earn returns on your investments even while they're pledged.
Check Loan Against Securities →
How is LAS different from a personal loan?
A personal loan is unsecured — the bank lends based on your credit score and income. LAS is secured — you pledge assets you already own. Because the loan is backed by collateral, the interest rate on LAS (typically 9–12%) is usually lower than a personal loan (12–24%). And unlike a personal loan, you don't liquidate your portfolio to get the cash.
NPS & Tax FAQs
What is Section 80C?
Section 80C of the Income Tax Act allows you to claim deductions of up to ₹1.5 lakh per financial year on specific investments and expenses. This directly reduces your taxable income. Eligible instruments include ELSS mutual funds, PPF, NSC, life insurance premiums, home loan principal repayment, and more. Explore Tax-Saving Investment Options →
What is NPS?
NPS stands for National Pension System. It's a government-backed retirement savings scheme regulated by PFRDA. You contribute regularly and the money is invested across equity, corporate bonds, and government securities. On retirement, you get a lump sum plus a monthly pension. NPS contributions qualify for an additional ₹50,000 deduction under Section 80CCD(1B) — over and above the ₹1.5 lakh 80C limit. Learn about NPS Investment →
ELSS vs PPF — which is better for tax saving?
ELSS (Equity Linked Savings Scheme) has the shortest lock-in of any 80C instrument — 3 years. And it has historically given the best returns among tax-saving options, often 12–15% over the long term. PPF, on the other hand, gives guaranteed returns (currently around 7.1%) with a 15-year lock-in but zero market risk. For younger investors with a long horizon, ELSS is often the smarter pick. For conservative investors or those nearing retirement, PPF makes more sense.
Quick FAQ Reference — All Topics (Schema-Ready)
A demat account holds your shares and securities in digital form. It works like a bank account — but for investments instead of money. It's mandatory for trading stocks on NSE or BSE. You need one to apply for IPOs and hold ETFs. Opening a demat account with Finoda is free and takes under 15 minutes online.
SIP (Systematic Investment Plan) lets you invest a fixed amount in a mutual fund at regular intervals — monthly, weekly, or quarterly. You can start with ₹500 per month. Each investment buys units at that day's NAV. Over time, SIPs benefit from rupee cost averaging and compounding, making them one of the most reliable wealth-building tools for regular investors.
F&O stands for Futures and Options — derivative contracts whose value is based on an underlying asset like a stock or index. Futures commit you to buy or sell at a fixed price later. Options give you the right, not the obligation. Both carry higher risk than regular stocks and are more suited to experienced investors, not beginners.
An IPO (Initial Public Offering) is when a private company first offers shares to the public. Investors apply via ASBA through their demat account. If the IPO is oversubscribed, allotment is by lottery. Once listed on NSE or BSE, shares trade freely. In 2025, India had over 100 mainboard IPOs — one of the most active years on record.
Section 80C of the Income Tax Act allows deductions up to ₹1.5 lakh per year on investments like ELSS mutual funds, PPF, NSC, life insurance premiums, and home loan principal. These deductions reduce your taxable income directly. Combined with Section 80CCD(1B) for NPS, you can save tax on up to ₹2 lakh per year.
NAV (Net Asset Value) is the per-unit price of a mutual fund scheme, calculated at the end of each trading day. You buy units at the current NAV when you invest and sell at the NAV when you redeem. A lower NAV doesn't mean a cheaper or better fund — what matters is the fund's performance and portfolio quality over time.
SIPs in equity mutual funds have historically returned 10–14% annually over long periods, versus 6–8% for FDs. But FDs are risk-free and predictable. SIPs carry market risk. If your horizon is 5+ years, SIPs usually outperform. For 1–2 year goals or risk-averse investors, FDs are the safer bet. We always recommend a mix based on your goals.
With Finoda, the process is fully digital. Visit our Open Demat Account page, enter your PAN and Aadhaar details, complete eKYC (via Aadhaar OTP or video KYC), and upload your bank details. The whole thing takes about 10–15 minutes. Account activation happens within 24–48 hours. No paperwork, no branch visit.
ASBA (Application Supported by Blocked Amount) is the standard IPO application method for retail investors. Your bid amount is blocked in your bank account, not debited. If you get an allotment, only the allotted amount is debited. If you don't, the block is released. It's safe, simple, and mandatory for all retail IPO applications in India today.
A Loan Against Securities (LAS) lets you borrow money by pledging your stocks, mutual funds, or bonds as collateral — without selling them. You get liquidity at lower interest rates (typically 9–12%) compared to personal loans, and your investments keep earning returns while pledged. It's ideal for short-term cash needs without disturbing your portfolio.
NPS (National Pension System) is a government-backed retirement savings scheme regulated by PFRDA. You invest through active or auto choice fund options across equity, bonds, and government securities. On retirement, you get a lump sum plus a monthly pension. NPS contributions qualify for tax deductions under both Section 80CCD(1) and an extra ₹50,000 under Section 80CCD(1B).
Term insurance gives your family a lump sum payment if you pass away during the policy period. There's no maturity benefit — it's pure protection. Because of that, premiums are very affordable. A ₹1 crore cover for a healthy 30-year-old can cost under ₹12,000 per year. We recommend term cover of at least 10–15 times your annual income.
ELSS (Equity Linked Savings Scheme) is a type of mutual fund that qualifies for Section 80C deductions. It has the shortest lock-in period among all 80C instruments — just 3 years. Your money is invested in equity markets, so returns can be significantly higher than PPF or NSC, though they come with market risk. Most financial advisors recommend ELSS for younger investors.
Yes. Your securities are held in your own demat account with CDSL or NSDL — India's two government-backed depositories. Finoda never holds your money directly. Stock transactions go through exchange-regulated systems. Mutual fund investments go directly to AMFI-registered schemes. Your money and securities are protected at every layer, following all SEBI guidelines.
Yes. For most mutual funds, a demat account is optional. You can invest via the AMC's website or through registered platforms by completing KYC with your PAN and Aadhaar. Your units are tracked via a folio number and Consolidated Account Statement (CAS). However, for ETFs or if you want everything consolidated in one account, a demat account is recommended.
For SIPs, you can start with as low as ₹500 per month. For lump-sum mutual funds, minimums vary by scheme but are often ₹1,000–₹5,000. For IPOs, the minimum bid is decided by the issuing company — typically ₹12,000–₹15,000 for one lot. For direct stock trading, there's no fixed minimum, but we recommend starting with at least ₹5,000.
We earn through a combination of brokerage on trades, trail commissions from AMFI-registered mutual fund distributions, and service fees for tax filing and advisory work. We are upfront about how we earn — our clients know what they're paying for. We never recommend a product because it pays us more; we recommend it because it suits your needs.
Commodity trading involves buying and selling raw materials — like gold, silver, crude oil, natural gas, or agricultural products — through regulated exchanges like MCX and NCDEX. You can trade via futures contracts. Commodities are a good way to diversify a portfolio that's heavily tilted towards equities, though they come with their own risks and volatility patterns.
Nothing bad happens. Stopping a SIP simply means no more money gets debited from your account for that investment. The units you already hold remain in your mutual fund folio and continue to earn returns. You can restart the SIP later or redeem the units at any time (subject to exit load and ELSS lock-in periods, if applicable).
Our team handles ITR filing for salaried individuals, business owners, and investors with capital gains. You share your documents — Form 16, bank statements, investment proofs — and we handle the rest. We file accurately, on time, and explain what's being filed and why. No jargon, no last-minute panic.
Still have questions?
We're happy to walk you through anything — no pressure, no obligation. Our Bangalore-based team is available Monday to Saturday.
Compliance Disclaimer
Investments in securities markets are subject to market risks. Please read all scheme-related documents carefully before investing. Past performance is not indicative of future returns. Finoda's operations follow SEBI's regulatory guidelines. Mutual fund investments are subject to market risk.
Regulatory Reference: SEBI Official Website ↗ | AMFI India ↗
Document prepared for Finoda (finoda.in) | FAQ Page | April 2026
