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Demat Account for Long Term Investment

Resilience is a strong quality of the Indian stock markets and a solid trait of Indian investors. When any investor opens a demat account, it is done with a view towards long-term investment. In fact, by definition, investors are those who hold the long-held contention of Warren Buffet’s truth, buying a solid stock and staying with it patiently. 

Long-Term Investment and a Demat Account

In the event you wish to open a demat account, it means you are an investor of the stock market, or any other asset like commodities, for instance. A demat account lets you hold your stock investments in electronic format. This is a secure way to hold your stock and store it for as long as you wish. In case you wish to invest in stocks as a long-term investment option, you have to have a demat account according to the SEBI (Securities and Exchange Board of India). Long-term investment translates to the fact that you are not looking for quick gains.   

Seasoned Investors

When you open a demat account, it is likely that you will do so with a brokerage or your bank. Your demat account is linked with a trading account which helps you to seamlessly trade on stock exchanges - that means you can purchase stock and sell it without any hassle. These two accounts will be connected to your bank account which facilitates the smooth flow of capital for trading. All these accounts, and the activities facilitated by them,  are available online, so investors have it easy. 

Experts and seasoned investors will swear by long-term investment if you want to see any real rewards in the stock markets. Traders are distinct from long-term investors as they likely trade on a daily basis, with a view to making short-term gains. However, there are those traders who know a good long-term stock when they see one and adopt a strategy of “buying it and holding it”. If you are a long-term investor, you know that you will be holding on to a robust stock for a while before you sell it to make a profit. This strategy is good in the long run as market volatility is tided over and ultimately your stock will increase in value. In such cases, a good demat account holds your stock for long periods. 

A Special Demat Account?

You may just be a long-term investor and go in for any upcoming IPO, and hold stocks allotted to you for a period of time, say 3-5 years. On the other hand, you may invest in direct equity and hold onto a good stock for gains in the long run. Whatever stocks and assets you hold for long-term gains, you need a demat account with a reputed financial institution, like a proficient brokerage or a bank. For long-term investment, there is no specific demat account to select, but since you are going to hold your stocks for a while, you should consider: 

  • A secure demat account with a reliable depository participant (a bank or a brokerage).
  • A demat account that generates regular reports of your holdings.
  • A demat account which offers low charges and fees, like low annual maintenance costs and transaction costs. 

Be Sensible

Long-term investment is a good option for the serious investor, and good returns out of this can be expected. It is easy to open a demat account online, and if you also want to invest in any promising upcoming IPO looking at a long-term horizon, this is a good idea too. 


Related Articles: How to Open a Demat Account Without a Broker | Factors to Keep in Mind While Opening a Demat account | Factors to Consider When Opening a Demat Account | 10 Points to Remember When Operating your Demat Account | Types Of Demat Account & Trading Account

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