If you’re new to the world of the stock market, there’s a high chance of you coming across the term ‘demat account.’ Have you ever wondered what it is? That’s exactly what we’re going to get to know. In addition to that, we’ll be taking a good look at the features and benefits of demat accounts as well. So, without further ado, let’s go ahead and first answer the question ‘what is a demat account?’
What is a demat account?
A demat account is an electronic account that you open with a depository like the National Securities Depository Limited (NSDL) or the Central Depository Services Limited (CDSL). It helps you store the records of financial securities such as shares in an electronic format. Just like how a savings bank account is used to hold your money electronically, a demat account is used to electronically hold the shares and other securities that you own.
Now that you know the answer to the question, ‘what is a demat account?’, let’s try to understand how it works via an example.
For instance, when you purchase shares of companies in the stock market, those shares get credited to your demat account. And when you sell those shares, they get debited from there. See how similar it is to your regular bank account?
Features of demat accounts
There are many user-friendly features of demat accounts that make financial transactions easier. Here’s a preview.
Benefits of demat accounts
Now that you’ve seen the features of demat accounts, let’s take a look at some of the benefits of demat accounts.
Conclusion: Thus, if you are beginning your investment journey, it is important to understand all the aforementioned features of a demat account. This will give one clarity while placing trades and make processes much smoother.
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