How Does Smallcase Work | Charges For Smallcase | Lab Of Rich

How Does Smallcase Work?

It has 3 steps -:

• Number 1, Opening Up A Smallcase Account
• Number 2, Buying Your First Smallcase
• Number 3, Rebalancing

First -: Opening A Smallcase 

Connect your Demat account to your smallcase account. If you do not have a Demat account, then start with that first.

You can open any Demat account like Zerodha, Alice Blue, 5paisa, Angel One, or HDFC Securities, all of them are available, and you can always do that. If you do not have one, then you can open up an account online, all that privilege and control is yours.

Second -: Buying A Smallcase 

Buying into a smallcase is very very simple provided your Demat account is already connected. It is similar to buying stocks or mutual funds, you just have to log in to the app or website and then connect your Demat account and you can purchase any Smallcase you want.

Third -: Rebalancing

Now rebalancing is very important because rebalancing is saying, when we bought a smallcase, it's not necessary that whatever stocks we bought, or in whatever ratio we bought those stocks. 

It's still the right thing. Because the market changes, conditions change, and industries change, it is possible that a company is not performing well, then some other company can take its place, or a company is performing well so we put weightage on it. That is the process of rebalancing.

So the experts of smallcase, they spend that time on this every day, this is their job 24/7 that they do for you. And when they feel that this requires an update, they will send you an email, which will be, that it's time for you to rebalance.

Whenever you would have to rebalance, you will come back to the smallcase site or app, and through 2 clicks, go through the entire rebalancing process.

What Are The Charges For Smallcase?

Charges for smallcase are of 3 types -:

• Number 1, The Charges By Smallcase
• Number 2, The Charges By Demat
• Number 3, The Subscription Charges

Number 1 -: Charges Of Smallcase

For all smallcases (created/customized included) a one-time fee of $100+GST is applicable on the day of purchase. No charges for any other order placed in that smallcase.

Note: Irrespective of the smallcase type. If you're investing less than 24,000 on the buy day, you are charged only 2.5% of the amount invested + GST (18% on fees) instead of 100+GST.

Number 2 -: Charges By Demat

1. Brokerage Charges: ₹0 (if you don't buy/sell a stock on the same day)
2. Exchange Turnover Fees: 0.00325% of the traded value.
3. GST: 18% of brokerage & exchange turnover fees Securities Transaction 
4. Tax: 0.1% of the traded value.
5. Stamp Duty: 0.01% (varies with the state).
6. SEBI Charges: 0.0002%.
7. Demat charges per stock (irrespective of quantity/shares sold on one day) when you sell.
8. CDSL (Zerodha DP) Demat charges: 13.5+ GST (18%)
9. NSDL (IL&FS DP) Demat charges: 12.5+ GST (18%)

Number 3 -: Subscription

Some smallcases are research-heavy and expertise-heavy, they are not free but they are paid. And there are many subscription options and you can buy with which you are more comfortable.

Conclusion

Finally, 3 things that I would summarize to bear in mind for smallcase investing.

Number 1 -: Long-Term Investing

Smallcase investing is a long-term investment. You would not be able to make money overnight. 

This is made and built on ideas that have a long duration return attached to that, so please don't get greedy and don't treat it as trading, that you invest today and if it goes down tomorrow, then you get frazzled, nothing doing. You have to be patient and invest for at least a 5-10 year period.

Number 2 -: 100% Control Over Stocks

Whenever you buy any portfolio of stocks from smallcase, then they are residing in your Demat account and your depository, not with smallcase.

Like when we buy a mutual fund, whether it is from INDmoney, Grow, Coin, or so on and so forth, then it is not with that platform, it is the mutual fund company. In the same way, smallcases that are bought are resting in your Demat account. You have 100% ownership at all points of time.

Number 3 -: Subscription 

Before taking the smallcase subscription please check that your cost of investing should not be more than 1-2%. So the more quantum you invest, the subscription amount should be 1-2%, not more than that. If it is more than that, then my suggestion, start with the free smallcases, enjoy the power and benefit of it, that is the best use of it.