A Demat account comes with many benefits, which is the main reason for its popularity. Not only does it greatly reduce the paperwork, but also provide added advantages of reduced transaction settlement time, higher cost savings, and investment holding safety.
How to Use a Demat Account
People who have just started stock trading may find Demat accounts to be complex to use, but as they use it, they will get to know all of its specifics. A Demat account works somewhat like a bank account. The only difference is that instead of passbook entries of money kept in the account, a Demat account has the details of the stocks and securities. Demat accounts are safe, convenient, user-friendly and there's no risk of theft or loss of certificates.
How to Operate a Demat Account
Operating a Demat account is not at all difficult. It can be opened after registration with any brokerage firm. With the help of an internet connection and password provided after the opening of the Demat account, it can be accessed anytime. A Depository Participant (DP), who will act as depository agent has to be selected before opening a Demat account. After that a form has to be filled and documents like identity proof, passport size photographs, PAN card, address proof etc have to be submitted. Post that you have to agree to the terms & conditions specified and then a verification process begins.
How To Start Trading With Demat Account
Once the physical verification concludes, an ID and an account number is provided to the account opener. Using the account number and the ID, the Demat account can be logged into and be used for buying and selling stocks.
For any trading, it's mandatory to have a Demat account. Buying and selling shares physically is cumbersome and very few agents would now be dealing in physical selling. So, to trade shares, a Demat account is crucial. Although, commodities, currencies, derivatives etc can be traded without a Demat account as well.
How To Use Demat Account To Buy Shares
There's an option of share allocation that allows investors to link Demat account with the trading account, which allows him to see all the Demat holdings. Share allocation process is simple and takes not more than a few minutes. All the shares can be allocated once and then after every new purchase, the shares can be allocated via the 'Allocate Share' option. Shares need to be allocated as often as the purchase is made. The time duration and the frequency of allocations depends on share purchase.
Earlier, keeping a tab on investments was a difficult process. Demat account has made it simple as all details are now at a single place. There are facilities that allow viewing transactions and balance online. All that's required for it is registration. Post that, you can log in to the account and view all details. By this the investor gets to know real-time the value of his investments and how much it has appreciated or depreciated. Don’t delay, open free demat account and start online trading.
Conclusion: Demat account offers numerous benefits and is the most convenient way to buy and sell shares, stocks and derivatives. If you have always wanted to trade shares but don’t have a demat account, then open one.
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