The benefits of having a demat account are plenty. No wonder why an increasing number of people are opting to open a demat account. By having one, investors don’t have to worry about maintaining physical copies of their trading documents. For those who are unfamiliar with this concept, a demat account is used to hold stocks and securities electronically.It’s a convenient alternative with enhanced security features. So, customers don’t have to worry about obtaining counterfeit certificates. One of the main objectives of a demat account is to facilitate online trading and make all documents easily accessible.
You would be pleasantly surprised to know that your demat account is quite similar to your bank account. The only major difference is that a bank account contains money while a demat account holds securities like shares of a company, mutual funds, bonds or exchange-trades funds. It allows users to hold them in a dematerialised form instead of physical certificates.
Investors wishing to invest in stocks are mandatorily required to have a demat account. To open such an account, you need to pick a Depository Participant (DP). DPs are those institutions that facilitate contact between depositories and investors. There are a couple of depositories registered with SEBI – CDSL (Central Depository Services Limited) and NSDL (National Securities Depository Limited). An account that you maintain with a DP is called demat.
The terms and conditions, fees and other important criteria of your account will be determined by the DP who acts as a broker.
Now, let’s discuss some of the benefits associated with a demat account.
Lower risks
Physical securities are vulnerable to losses, thefts or damages. Additionally, investors need to be wary of fake securities or bad deliveries. All these risks can be completely eliminated by opting for a demat account.
Easy holding
Storing and maintaining physical certificates is certainly not an easy job. Monitoring their performance is an added responsibility. A demat account is a platform that allows users to conveniently hold and track all their investments in one place.
Odd lots
Buying and selling physical certificates is inconvenient and can only be done in specific quantities. The option of dealing with single security or odd lots was not available previously until the advent of demat accounts.
Reduced costs
There are several additional costs associated with physical certificates like handling charges, stamp duty and many other expenses. Thanks to demat accounts, investors don’t have to shell out extra money from their pockets.
Less time
The time required for executing a transaction has been significantly reduced due to elimination of paperwork. So, customers can make more purchases and sales of securities within a shorter time frame.
It’s safe to assume that majority of Indians in 2019 have a bank account. Thanks to technology, essential financial services are being made available even in the remotest parts of the country. This has made it possible for people to open demat account online as well. All you have to do is visit the Axis Direct website and follow the instructions to open demat account online and start trading today.