Indian markets turned a new leaf in 1997, and Demat (short for ‘dematerialised’) accounts were established to store shares and stocks in electronic form. Before this, stocks and other securities were stored and exchanged through physical certificates, involving bulky and tedious paperwork, and a massive burden on effort, time and storage.
You may see a lot of promotions by banks and brokerage firms compelling you to ‘open Demat account online’. While this is a common practice, you should know that if you want to purchase securities or make investments in the stock market, you have to open a Demat account. Nowadays, any financial asset you wish to own has to be stored in an electronic format, in a Demat account. Most banks have facilities for their own bank account holders to open Demat account and this is linked to a trading account. This facilitates the buying and selling of securities and other assets, and these can be stored in a secure way in the given Demat account.
An online Demat account holds all your assets/investments in a safe way, whether you possess ETFs, shares, bonds, mutual funds, etc. Here are convincing reasons for you to open a Demat account:
- Demat accounts make the whole process of trading, storing and transacting funds easy and rapid when it comes to investing.
- Shares and other assets may be held in physical form, but in order to trade (buy or sell), shares must be turned into Demat formats.
- This is a secure way to hold securities, without the worry of loss.
- Dematerialisation enables transactions online, a boon while you are even on the move.
- Demat account opening is simple and doesn’t take too much effort on an investor’s or a broker’s part.
The best account for Demat is one that is linked to a trading account and your bank account. This facilitates easy transacting, depositing of funds, and access to funds when you wish to purchase assets online. The following are some features to know about before you own a Demat account:
The DP/Depository Participant - This is the agent/intermediary acting as such for a central depository like the NSDL or CDSL. The DP is usually a bank or brokerage where you open your Demat account. The DP has a licence to provide services of a Demat account to traders and investors. The licence to do this is either associated with NSDL or CDSL.
Client ID - Every Demat account has an assigned unique client identification number which is sixteen digits long. Out of the sixteen digits, the first eight represent the DP and the final eight are a distinctive identification number for clients.
Successful investors will tell you that it takes a lot of effort to trade and earn profits through investing and trading. However, to reach this stage, you have to first invest in the right stocks. These may be held for the long term or short durations. Hence, you have to mandatorily own a Demat account. This can be easily undertaken with Motilal Oswal.
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