Although the understanding and operation of a Demat account is pretty uncomplicated for the most part, there are aspects to it that you may not have a clue about. The recent rise in Demat accounts in India as more individuals sek investment in securities, has made the Demat account seem a necessary condition with most investors who want short-term and long-term profits.
What is more revealing is that Demat accounts are becoming popular in small towns and cities, showing a yearning for investment in all kinds of securities, from stocks to mutual funds and commodities to exchange traded funds. While this is good news as more people wish to invest and think of the future, besides diversifying assets, it is also important to know everything you can about holding Demat accounts today.
Open a Demat Account
When you wish to open a Demat account online, you may think the process is easy, and you wouldn’t be wrong. However, merely opening a Demat account is not enough for you to know some of the more vital details that are related to it. It is not hard to miss certain Demat account-related factors that could be important. The main reason to open a Demat account is that it holds your securities safely in electronic form. When linked with a trading account, it facilitates your transactions of buying and selling stocks and depositing them safely in your account. Nonetheless, four things you probably didn’t know about Demat accounts may reveal vital information about Demat accounts.
Four Revealing Facts About Demat Accounts
You may have overlooked certain aspects of a Demat account when you started it, but you can learn from mistakes of oversight and rectify things, or prevent them if you are about to begin a Demat account. Here are four things you probably didn’t know about Demat accounts:
1. Debits and Credits -
You have probably opened a Demat account online for investment purposes, but you have also opened a trading and bank account linked to it. It is important to track your online account activity with accuracy and regularity. You shouldn’t wait for your broker to send you physical invoices, but go online and monitor transactions as this is a facility you get.
2. Filling Slips -
When you wish to sell shares from your Demat account, you have to fill in a ‘Debit Instruction Slip’. This slip cannot have any errors on it, and nothing can be crossed out. Hence, make sure you have your Demat account information ready to fill in the slip accurately. Your signature should be precise too, matching the records of your depository participant.
3. Demat Charges -
Your Demat account incurs specific fees and charges and you should know these well. In case your Demat account is connected to your bank account, you must make it a point to be aware of what is being charged to you and when. Additionally, your charges should never be paid by cash, only through online transactions. This can prevent misappropriation of your funds.
4. Dormant Accounts -
Your Demat account should never remain in a dormant state. In case you do leave your Demat account idle, you should monitor it closely, as using such an account in the future may prove difficult. Besides this, for safety reasons, you should monitor dormant accounts to keep a track of any dubious activity.
Account Awareness
Whatever financial accounts you manage, and a Demat account is one of them, you must be fully in-the-know about the important details of how accounts are operated. Paying attention to details and doing your research helps. You can easily open a Demat account with a secure broker, like Motilal Oswal, and have added security knowing that such a reliable broker has your best interests at heart.
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