Benefits and Drawbacks of a Free Demat Account You Should Be Aware Of

Demat accounts were first initiated in 1996. Since then, they have altered the Indian stock market landscape. Physical trading is in the past, and the hassle-free Demat account linked to a trading account facilitates quick and effortless investment processes. Wiping out paper-format shareholding altogether, now, there is no opportunity for fraudulent activities like forgery, loss, theft, etc. Electronic storage and trading of shares has brought in a system where more and more individuals partake in Demat account opening procedures. 

• Demat Account Services

In current times, it is easy to open a Demat account online. Moreover, it is mandatory for investors and traders of stock markets to have a Demat account. Many banks and brokerages, such as the prominent Motilal Oswal, a leading Indian broker, have introduced the offer of free Demat accounts. Brokerages offer you free Demat accounts with linked trading accounts and a host of valuable services. Firstly, before getting in the depths of pros and cons of free Demat accounts, you may want some clarity on what a free Demat account entails, and if any Demat account charges are involved at all. 

Generally speaking, a free Demat account indicates that the Demat account has nil opening fees. Most DPs (depository participants who can officially open Demat accounts on an investor’s behalf) like banks and brokerages call a Demat account ‘free’ when they offer fee waivers on opening an account and also on the initial year’s maintenance charges. 

• Advantages of a Free Demat Account

The availability of good Demat account services can be an impetus for taking your investments further and farther. Needless to say, Demat account opening with a free Demat account gives you the following advantages: 

• Secure Accounts - Any Demat account offers you a layer of protection from fraud and spurious activity. A free Demat account gives you secure trading as settlements are completed in a matter of a couple of days. 
• Error-free Accounts - As a free Demat account is offered to you as motivation to engage in more investment, you get an account that seamlessly allows you to electronically store your securities, with no room for human errors. 
• Easy Operation - Demat account charges may be waived for a period only, but any good Demat account gives you ease of operation. For instance, in the event of the passing away of a joint holder, the transmission of shares is passed on to the nominee/joint holder. 
• Single Storage Space - A free Demat account allows you to store your assets in one spot.  You can store not just stocks, but bonds, debentures, ETFs, etc.
• Low Costs - Earlier, most investors were wary of making investments and opening a Demat account as free accounts and low costs were not offered. Nowadays, people don’t hesitate to open a free Demat account and invest without the concern of high charges. 

• Disadvantages of a Free Demat Account

Free Demat accounts should be opened with caution, just as any other accounts may be. However, if you sign up with a reliable broker like Motilal Oswal, you will benefit. Still, here are the disadvantages of a free Demat account:

• Spurious Brokers - Before signing up for Demat account opening procedures, you must do your research for the right brokerage firm. Traders and investors must look for reputed brokers who offer the highest standards of quality and transparency. 
• Getting Carried Away - With a free Demat account just a stone’s throw away, investors may be compelled to invest for the short-term, trying to get quick profits. This may be a risky proposition, and investors should look at long-term gains too.
• Advanced Dealings - You have to be tech-savvy to operate and manage online Demat accounts and trading platforms today. This may be easy for some, but is a challenge for others. 

• Open A Free Account Today

With Motilal Oswal on your side, your free Demat account can be opened in the blink of an eye. An easily-navigable portal allows you to trade with the best knowledge base to help you earn profits.

Related Articles:

What are the benefits of using MO Investor App | Investing the Right Way with MO Investor | Investing in Mutual Funds is Now Easy with MO Investor App | 5 Advantages of using MO