When you plan to invest in any securities and assets, it is mandatory that you have a Demat account. This facilitates the storage of your securities, whatever they may be. Most banks and brokerage firms have the advantages of providing investors with Demat accounts. You can match your Demat account to suit your investment purpose. This is where a BSDA or basic service Demat account enters the picture.
Is Demat account required for mutual fund? Is it needed for stocks? The answer to both these questions is ‘yes’. Previously, investors who invested in any kinds of assets, be it stocks or bonds, held physical certificates representing securities. However, with dematerialisation, any investments can be held in a storage base called a Demat account. Hence, ‘demat’ stands for dematerialisation of shares, stocks, bonds, ETFs, mutual funds, and any other investment. In order to invest in all these and more, you need to have a Demat account, either with your bank or a brokerage firm (depositories). Most banks and brokerages like Motilal Oswal will likely give you the facility to open a free Demat account online.
- Best Demat Account, Lowest Brokerage
You cannot just turn into an investor overnight. Well, actually, in the current digital age we live in, becoming an investor/trader is possible very rapidly with online access to trading platforms and the ability to open Demat accounts fast. Note, though, that a Demat account is always linked to a trading account if you wish to invest and trade on a regular or frequent basis. While availing of any service, investors may consider charges for these. For instance, with a share market Demat account, you will be charged, not for opening the account, but brokerage fees on transactions made. Hence, if you are just starting out, you may have a limited budget and want to lower your expenses in terms of brokerage fees, maintenance, etc. You may even find yourself asking the question, “Do we need a Demat account for mutual funds?”
- A Basic Service Demat Account
Probably, the best Demat account, lowest brokerage charges involved, would be a BSDA or a basic service Demat account. Small-scale investors who do not intend to, or cannot, invest in stocks with regularity, benefit from this. This account, therefore, is opened and can be operated at lowered costs compared to a regular Demat account. Certain normal Demat accounts may have a high fee for maintenance of accounts, and if investors aren’t using these frequently, it makes no sense to pay high charges. However, when you open a BSDA, this has to be your sole Demat account.
If you are a serious investor, you can open a Demat account for free at a reputable broker like Motilal Oswal. Opening a regular Demat account has its advantages as with a BSDA some depositories may have a cap on the amount of investments held in the account.
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