Just like a savings account, a demat account helps investors save and access funds easily, along with keeping them secure from mishandling and theft. At present, a Demat account and a brokerage account are essential tools for stock investment. These accounts are used to hold securities and shares in a digital format. Moreover, its major purpose is to store shares that have been dematerialized or bought, hence making trading easy for traders while performing online trading.
Demant Account- Meaning
A demat account allows investors to store securities and shares in a digital format. While performing online trading, investors purchase shares and store them in this account. In addition, this account securely holds multiple investments made by an individual in government securities, shares, bonds, exchange-traded funds, and mutual funds.
Demat accounts have promoted the digitization of the stock trading market and निफ्टी 50.
Moreover, the invention of this account has minimized the risk of theft, malpractice, and damage by storing documents securely in electronic format. At present, an investor can open demat account in just five minutes.
Demat Account- Importance
A demat khata offers a digitally convenient and secure place to keep shares and securities.
- It even minimizes the risk of forgery, theft, and damage to the physical certificate. Hence, by using a deemed account, you get to transfer securities instantly.
- Once your trade is approved, you can transfer the shares digitally to your account.
- In addition, in cases like mergers or stock bonuses, the shares are automatically transferred to your account.
- You can gain information regarding your demat account activities online by logging into the website.
- To trade on the go, you can use any of your smart devices, and hence, you do not need to visit the stock exchange to execute a trade.
- Demat accounts also allow investors to enjoy lower transaction costs because share transfers are not subject to stamp duty.
Such benefits and features of a Demat account encourage traders to start investing, enhancing the possibility of better returns.
Demat Account- Working
Trading via a demat account is the same as physical trading, except that it is electronic. You start trading by ordering from your online trading account. However, for this purpose, it is essential to link both your demat and trading accounts. Once you place an order, the exchange gets your order processed.
Your demat account represents the price of shares and their availability before they get verified for final order processing. Upon the completion of your order processing, shares will be visible in your statement of holdings. Moreover, if a shareholder plans to sell their shares, a delivery instruction note needs to be given along with the details of that particular stock. Later, the shares are debited from your debit account, and the equivalent value of cash is credited to the trading account.
Conclusion:
A demat account is a crucial tool for digital trading. It helps streamline investment management by storing securities in a digital format. In addition, it provides multiple benefits, such as easy transfer, better security, and simplified portfolio management, reducing the risks of theft and loss.