Demat account stands for de-materialized account. This account is similar to your bank account; the only difference is that instead of money, it holds your stocks and other financial instruments in paperless or digital format. Earlier the trading of shares and mutual funds or other financial instruments were done on paper and you needed to retain a copy in order to prove your claim as an investor. Thanks to the internet which has paved the way for the demat account, now you can hold all your investment online.
If you are planning to invest in stock market, the first thing you need is to open demat account along with a bank account and a trading account. Companies into banking and broking generally offer you all the three accounts combined together known as a 3 in 1 account. You need to open demat account with a depository participant (DP) via your bank or other financial institutions, the two DP registered under SEBI are National securities depository limited (NSDL) and Central depositories securities limited (CDSL).
The need for having a demat account and its advantages:
In order to deal in securities in the Indian stock market, it is mandatory for you to open a demat account with depository participants (DP). Once you have the demat account registered under any of the depository participants, you are all set to buy and sell stocks and securities at will. Investing in stocks and securities through a broker and having a personal demat account gives you far more freedom and advantages, such as:
• It is the most convenient way of dealing in securities as all the transactions are carried out online. You are able to buy and sell securities from anywhere on the go.
• It ensures immediate buying and selling of securities as all the transactions are done electronically.
• It saves you a lot of time and hard work as compared to paper transfers as you don’t have to keep track of huge paperwork.
• The risks associated with paper securities such as bad delivery, fake securities, delays and thefts are totally eliminated.
• There is no limit for purchasing and selling of securities. You can even buy and sell one security at a time.
• The transaction cost is very low compared to paper securities as you don’t have to pay any stamp duty.
Because of the above mentioned points, a demat account is very much helpful especially for new investors, who are totally unaware of the workings of the share market. It allows you to be free from stress by providing maximum freedom while choose transactions according to your needs.
If you are planning to invest in stock market, the first thing you need is to open demat account along with a bank account and a trading account. Companies into banking and broking generally offer you all the three accounts combined together known as a 3 in 1 account. You need to open demat account with a depository participant (DP) via your bank or other financial institutions, the two DP registered under SEBI are National securities depository limited (NSDL) and Central depositories securities limited (CDSL).
The need for having a demat account and its advantages:
In order to deal in securities in the Indian stock market, it is mandatory for you to open a demat account with depository participants (DP). Once you have the demat account registered under any of the depository participants, you are all set to buy and sell stocks and securities at will. Investing in stocks and securities through a broker and having a personal demat account gives you far more freedom and advantages, such as:
• It is the most convenient way of dealing in securities as all the transactions are carried out online. You are able to buy and sell securities from anywhere on the go.
• It ensures immediate buying and selling of securities as all the transactions are done electronically.
• It saves you a lot of time and hard work as compared to paper transfers as you don’t have to keep track of huge paperwork.
• The risks associated with paper securities such as bad delivery, fake securities, delays and thefts are totally eliminated.
• There is no limit for purchasing and selling of securities. You can even buy and sell one security at a time.
• The transaction cost is very low compared to paper securities as you don’t have to pay any stamp duty.
Because of the above mentioned points, a demat account is very much helpful especially for new investors, who are totally unaware of the workings of the share market. It allows you to be free from stress by providing maximum freedom while choose transactions according to your needs.
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