Why is a Demat Account a must for 21st Century Investor
India's banks are working hard to ensure that critical services are available in every part of the country. As a result of this, and the fact that the Indian market provides an open opportunity for every young professional, student, or seasoned businessperson to generate money, banks gradually included a Demat account to the list of necessary banking services.
You can manage and hold your equities and shares electronically with a dematerialized or Demat account. It is the most important prerequisite for market trading. The shares transitioned from certificates to electronic figures reflected in Demat accounts as time passed. This made having a Demat account and a trading account a requirement for investors who wanted to trade securities. Mutual funds, government securities, ETFs, and equity shares are all held in a Demat account. A trading account, on the other hand, is used to place orders and trade financial instruments.
Shares held in a Demat account are safe and simple to transfer when needed. You can trade directly in the stock market and actively participate in exchanges via online platforms if you use online trading. Furthermore, SEBI has made it mandatory for all investors to begin their investment journey only once they have opened an online free Demat account. This was done with the goal of making trading easier. Previously, investing in the stock market required a significant amount of time and effort. The procedure included hiring and consulting a broker to discover the best offers, manually completing all purchase-related requirements, and waiting for the physical shares certificate to arrive. A Demat account, on the other hand, is a hassle-free choice, as evidenced by the fact that almost 40.8 million demat accounts were opened in India in 2019-20.
- Why is it necessary for today's investor to have a demat account?
1. With ease of access and speedy share transfers, opening a Demat account can assist remove trade barriers. You are not required to use brokers or sub-brokers to execute your deals. All that's left is to get advice from a reputable Depository Participant and open a Demat account. The shares in your Demat account can be used as security for a bank personal loan. The nicest thing is that the share certificates do not need to be physically handed over to the bank. Most banks offer loans ranging from 1 lakh to 25 lakhs against shares held in a Demat account.
2. Having a Demat account allows you to save money on stamp duty on agreements between you and the Depository Participant. As a result, transaction and registration costs are reduced. Operating through a Demat account has no geographical or security constraints. The account has a variety of access options, all of which may be controlled electronically. This allows you to sell, buy, and track stocks from anywhere. With the launch of the Demat account, dealing in odd lots is now allowed. Previously, dealing with a single security or odd lots was impossible.
3. When it comes to today's markets, the value of a Demat account goes beyond what appears to be a reasonable emphasis. Motialal Oswal’s Refer & Earn Demat account service is hassle-free and essential for better financial planning, which answers the question of the account's relevance and importance.
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