Ever since the introduction of the demat account in the late 90s, the Indian stock market has taken off like a rocket. The number of retail individuals participating in the stock market has continued to steadily rise over the years. And there’s no doubt that the main reason for this meteoric rise has been the introduction of the online demat account.
Basically, a demat account is an online repository that allows you to store your financial instruments and securities in an electronic manner. It does away with the need to hold shares and securities physically, where it is exposed to several risks such as theft, forgery, mutilation, and degradation.
That said, there’s a huge misconception in the minds of prospective investors and maybe even seasoned investors. They seem to think that only shares of companies are stored in the demat account. However, that’s simply not true. Not only shares, but plenty of other financial instruments can also be stored in a demat account. Wondering what they are? Here’s a list of them that can be dematerialized and stored in a demat account.
Since we’ve already covered shares and equity, let’s take a look at some of the other lesser known financial instruments.
1. Rajiv Gandhi Equity Savings Scheme (RGESS): This government-backed scheme was introduced in the year 2012-2013 especially for new investors looking to invest their money in the stock market. The units of this scheme can be dematerialized and held in a demat account.
2. Gold ETF: These are essentially exchange traded funds (ETFs), which are a type of security that track the performance of an asset, which in this case is gold.
3. Bonds and Non-Convertible Debentures: Bonds, whether issued by the government or by private entities, can be dematerialized and held in a demat account. Also Non-Convertible Debentures (NCDs) issued by companies are also eligible for dematerialization of securities as well.
4. Mutual funds: All mutual fund units, whether they invest in equity, debt, or a mix of both, can be dematerialized and stored in your demat account.
If you have any physical share certificates in your possession, it is advisable to apply for dematerialisation of shares as soon as possible. This will not only help you be able to sell the shares freely, but also ensure that it is kept safely and securely. If you don’t already own an online demat account, don’t worry. Just get in touch with Motilal Oswal right away to apply for one within a few minutes.
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