Now, to be able to invest in the stock of a company, you require a demat account, which can be opened through a depository participant (DP). However, merely possessing a demat account will enable you to only invest in the primary market. You will not be able to buy or sell shares through the stock exchanges, which is the secondary market. For that, you would need to open a trading account with a stock broker.
To sum up, you would require an online demat account as well as a trading account to be able to buy and sell shares in both the primary and the secondary markets. You’re now probably wondering if you would have to open a demat account separately and a trading account separately, right?
Well, yes, you could do that. Or, you could just simply open a 2 in 1 demat account. What is a 2 in 1 account, you ask? Here’s something that can help give you some clarity.
What is a 2 in 1 account?
A 2 in 1 demat account is basically a combination of both demat and trading accounts. These accounts are generally offered by stockbrokers who don’t possess a banking license. The 2 in 1 account was introduced to make it easier for prospective investors to get into the world of stock trading. And to reduce the amount of effort and paperwork involved in creating two different accounts.
How does a 2 in 1 demat account work?
Now normally, when you choose to open a demat account and a trading account separately, you would have to approach a depository participant and a stock broker. And once you’re done with all the account opening and Know Your Customer (KYC) norms, your accounts will be opened. Upon opening both of these accounts, you cannot just jump into trading right away. They would have to be manually linked with one another to facilitate buying and selling of shares via the stock exchange, which adds another unnecessary step.
A demat account 2 in 1, on the other hand, allows you to open both demat and trading accounts through a single application process. Since these accounts are generally offered by stockbrokers who are also depository participants, you don’t have to approach two different entities to open the accounts. Also, there’s absolutely no need for you to manually link the demat account with a trading account since it is automatically linked with one another by the stockbroker cum depository participant.
Now, when you purchase a share through the trading account via a stock exchange, the share is automatically credited to your demat account. And when you sell a share through the trading account via a stock exchange, the share is again automatically debited from your demat account.
Conclusion
As you can see, a 2 in 1 demat account can be hugely beneficial to you and make it extremely easy for you to start trading. If you wish to open an online demat account, Motilal Oswal may just be able to help you out. Get in touch right now.
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