A demat account allows investors to hold their shares in an electronic form. It is a replacement for holding and trading in physical share certificates, which involved a lot of paperwork. As most of the transactions are now online, an investor can trade conveniently with demat account.
Stocks in demat account remains in dematerialized form, where all your stocks are converted from physical to electronic form to increase accessibility. Apart from shares, the demat account can also hold bonds, ETFs, mutual funds, gold bonds, and other similar assets with a unique ISIN number.
Importance of Demat Account
A Demat account provides a digitally secure and convenient way of holding shares and securities. It eliminates theft, forgery, loss and damage of physical certificates. With a Demat account, you can transfer securities immediately. Once the trade is approved, the shares are digitally transferred to your account. Moreover, in case events like stock bonuses, mergers, etc., you get shares automatically into your account.
Your Demat account information regarding these activities is available online by simply logging into the website. You can trade on-the-go using your smartphone or desktop. So, you needn’t visit the stock exchange to transact. You also enjoy the benefit of reduced transaction costs because there is no stamp duty involved with the transfer of shares. These features and benefits of a Demat account encourage a larger trade volume by investors, thus increasing the potential for lucrative returns.
Starting Stock Market Investments
Opening Demat account is the first step towards starting an investor’s journey. But to start trading, you will need a bank account, Demat account, and a trading account. A Demat account is merely a deposit account used for holding securities for the time you trade. A trading account is necessary to make real transactions. With a trading account, you can invest in a wide range of investment tools such as stocks, commodities, derivatives, and e-gold.
If you think managing three accounts for trading is cumbersome, you can opt for a three-in-one account that facilitates seamless trading. Use the three-in-one account to reduce time in switching between accounts that can cause you to lose a good a trading opportunity.
