Today everyone is dealing in share trading and relishing its multiple perks. Before starting to trade, there are plenty of things that you need to consider, and having a Demat account is one among them. Dematerialised account or Demat is an account to store your shares and securities electronically.
The main purpose behind opening a Demat account is to hold your shares in electronic form and safeguard it from all the risk factors. Today Demat account is mandatory to trade in shares. It makes the entire trading process easier for you.
What is a Demat Account?
Dematerialised or Demat account is a special account to store shares electronically. When you are trading in shares, all your earnings, and holding are transferred to your Demat account directly. You can easily access your account through your smartphone or desktop, which makes it even easier for you to trade. Not only shares, but you can also hold debt securities, equity, bonds, mutual funds, etc.
Indian depositories like CDSL and NSDL offer free Demat account services to the traders. It is facilitated by stockbrokers, depository participants or intermediaries on behalf of the government. Intermediaries charge a certain amount of fee, which depends on the volume of shares held in the account, and terms and conditions of the depository. It is important to find an ideal stockbroker or depository participant that can fulfil the Demat account services for you.
What Do You Need To Know About Dematerialisation?
When you are dealing with Demat, it is imperative to understand dematerialisation. It is basically the process of converting share certificates into the electronic version. Dematerialisation makes it easier to hold the shares and minimise the risk of breaches and fraud.
As a trader, you need to open a dematerialised account with a DP (depository participant) to start trading. The major reason behind bringing dematerialisation into existence is to eliminate the need for physical storage of share certificates and simply turn them to electronic form. It helps in keeping track of your trading and monitor the holdings.
Benefits of Opening Demat Account
You cannot ignore the need to open Demat account. Furthermore, you will get to enjoy some perks that were not available in physically storing your shares-:
- Risk-free holding: No more worrying about loss of shares.
- Multiple Securities: You can hold more than just shares in your account.
- Layers of Security: Add tighter security according to your needs.
- Instant Trading: Trade from anywhere and monitor your holding in real-time.
The Bottom Line
It is high time that we realise the precariousness hidden in online share trading. No matter how stringently you conduct trading, there are some loopholes left. Hence, it is important to remain prepared for everything. Demat account is the first step to secure your holding and make sure you experience safe trading.
You need to open a Demat account in order to trade safely today. It helps in storing your holdings electronically. The above mentioned were some of the crucial details you need to be aware of the Demat account.
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