Mutual funds are one of the most popular investments. Investors pool money into a mutual fund to invest in stocks, bonds, and other securities. Mutual funds offer a high level of diversification, convenient investment methods, and the expertise of fund managers.
The introduction of 3-in-1 accounts, with Demat, savings, and trading functions, has made it easier to invest in mutual funds. The process of opening an account is also simple and hassle-free.
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Before you open a Demat account to invest in mutual funds, you must have some information about it.
A Demat account stores your holdings in a digital or dematerialised form. It is an intermediary between the account holder and the two Indian depositories - the National Securities Depository Limited (NSDL) and the Central Depository Services Limited (CDSL). The idea originated in 1996, after which the physical share certificates of investors were converted into electronic form for storing in the Demat account.
You can open a Demat account with a Depository Participant (DP) to hold, trade, and invest in securities, such as stocks, mutual funds, commodities, derivatives, Initial Public Offerings (IPOs), Exchange-Traded Funds (ETFs), and currency.
While the account isn’t essential for making mutual fund investments, it offers many other benefits.
Note: Submitting the PAN Card and bank details for opening a Demat account is compulsory.
A Demat and trading account can incur Goods and Services Tax (GST), stamp duty, and other SEBI-mandated charges. You will also have to take care of the following:
Demat accounts are a convenient way to invest in mutual funds. A DP can help you with the process of opening a Demat account. You can use it to store, manage, and trade securities seamlessly and securely. The account is accessible from anywhere and at any time. It also lets you appoint a nominee to whom your investments will pass on in case of an unfortunate event.
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