WHY EVERY INDIAN NEEDS TO HAVE A DEMAT ACCOUNT?
Demat or Dematerialised Account is the same as your other bank accounts but it lets you manage your shares and securities in the digital form. In the present time it is mandatory to maintain all the trading of stock markets in the Demat account but if you have 500 shares in your account, you can store it in physical forms too.
With the evolution and the rapidly growing digital world, we have hardly seen anyone going to the registered office or company to buy the shares or debentures as everything is done by sitting just at your home or office space.
To function a demat account, you should go to a depository participant who is registered with Securities and Exchange Board of India (SEBI) and act as an intermediator between investors and depositors.
Thus, there are reasons why you should have a demat account and avoid personal losses.
- With the Demat account, you don’t need to maintain separate accounts for mutual funds, stocks, IPOs or bonds as they all can be managed in one portfolio and make the overall process quicker and easier.
- The demat account can be processed from anywhere and anytime according to your convenience as everything is available online and round the clock.
- As the demat account comes into action, limits of buying minimum securities are over and now you can trade or buy as low as one share or security also.
- Instead of keeping one type of security, you can now have multiple types of securities including the mutual fund, stocks, IPOs, Bonds and more in one single account.
- Maintaining an online demat account is much easier than maintaining plenty of paper as there will no fear of losing and damage over the passing time.
- Avoid the stamp duty as there will be directly dealing with you and your depository which will save the cost of registration and dealing.
However, when it comes to differentiating between Demat account and trading account, you need to understand a hair-line difference between both of them. while Demat account holds all the financial securities like stocks, mutual funds, IPOs or NCDs in the account and does not allow to buy or sell it, the trading account comes with the option of buying or selling of the securities.