A Demat account allows investors to hold their shares in the market in an electronic form. If you are looking forward to investing in shares, then you will have to understand the concept of demat and demat accounts. Investment in securities is considered one of the best ways to grow and increase your wealth, with just a little bit of smart effort. However, if you are still feeling unsure about opening demat trading account, read here to know the benefits of one-
• Decrease in expenses- In case of securities, your demat account will not need a stamp duty, which results in a substantial amount of cost reduction. Previously, the stamp duty was 0.5% for every stock you purchase and you would have to visit the stock exchange in order to share your transfer stamps. This made the whole process a very complicated one. Now you can avoid this charge by having demat trading account of your own.
• Risks associated with delivery- One of the best benefits of a demat account is zero delivery risks. Since there is no paperwork involved, the risk of fake shares, theft, and wrong deliveries in the electronic trading process are eliminated. This type of a system generally credits your demat account automatically, irrespective of the type and number of shares. The same process applies to other stock transactions as well, such as stock bonuses and stock splits.
• Updates are automatic- When it comes to demat accounts updates are automatic in nature. You will not have to provide your details every time you deal with a company, despite having a common account for all your securities transactions. Your demat account will have all the relevant and necessary information related to the transaction.
• The convenience of selling shares- Earlier, you could not sell an odd number of shares. This means, you could not to sell 37 shares, as it would be a difficult and inconvenient process. You could only sell shares in even numbers such as 50, 100, 150 etc. However, this practice has been modified and you can sell as many shares as you want, even a single one.
• Provision for the nomination- Contrary to earlier practices, you can now nominate other people while opening a demat account. Earlier, when there were share certificates it was compulsory to have a joint account holder. In case you are interested, talk to your financial advisor and the depository participant regarding the procedure of adding a nominee.
The biggest reason for opening demat trading account is not to just invest money but also to make money. If you have a clear idea about the whole thing and its benefits, you will know that it is the best decision you can take when it comes to investing in shares.
• Decrease in expenses- In case of securities, your demat account will not need a stamp duty, which results in a substantial amount of cost reduction. Previously, the stamp duty was 0.5% for every stock you purchase and you would have to visit the stock exchange in order to share your transfer stamps. This made the whole process a very complicated one. Now you can avoid this charge by having demat trading account of your own.
• Risks associated with delivery- One of the best benefits of a demat account is zero delivery risks. Since there is no paperwork involved, the risk of fake shares, theft, and wrong deliveries in the electronic trading process are eliminated. This type of a system generally credits your demat account automatically, irrespective of the type and number of shares. The same process applies to other stock transactions as well, such as stock bonuses and stock splits.
• Updates are automatic- When it comes to demat accounts updates are automatic in nature. You will not have to provide your details every time you deal with a company, despite having a common account for all your securities transactions. Your demat account will have all the relevant and necessary information related to the transaction.
• The convenience of selling shares- Earlier, you could not sell an odd number of shares. This means, you could not to sell 37 shares, as it would be a difficult and inconvenient process. You could only sell shares in even numbers such as 50, 100, 150 etc. However, this practice has been modified and you can sell as many shares as you want, even a single one.
• Provision for the nomination- Contrary to earlier practices, you can now nominate other people while opening a demat account. Earlier, when there were share certificates it was compulsory to have a joint account holder. In case you are interested, talk to your financial advisor and the depository participant regarding the procedure of adding a nominee.
The biggest reason for opening demat trading account is not to just invest money but also to make money. If you have a clear idea about the whole thing and its benefits, you will know that it is the best decision you can take when it comes to investing in shares.
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