If you have decided to open a Demat account, to invest or link it to a trading account, you should know that there are millions of Indians opening one at the same time, in all probability. The advantages of owning a Demat account are plentiful in today’s financial scenario. More and more individuals are realising this as other investment channels seem out of reach with high interest rates in fixed deposits, for example. So we know that Demat accounts are special, and it's time we found out why.
A Demat account (a dematerialisation account) is a specific account that holds your securities like stocks and shares, but in an electronic or digital format. To open a Demat account means to have your securities safely stored in one place in a form that cannot be destroyed or tampered with. Previously, before the advent of dematerialisation, shares were held by individuals in paper form. Hazards related to this were evident as paper certificates frequently wore out or got misplaced/stolen. What’s more, Demat accounts can store a variety of your assets from shares to government securities. What makes Demat accounts popular is that there are different types available to facilitate use by different kinds of individuals, like regular Indian citizens and NRIs.
When you wish to open a Demat account, the process is easy and can be done quickly online. There is no hassle of waiting in queues at banks or providing too much documentation. As this is an electronic account, several good banks and better still, reputed brokerages have the facility of instant online opening of a Demat account. Usually the bank or brokerage firm has a Demat department and acs as your DP (depository participant), authorised to open a Demat account on your behalf. You can upload your supporting documents while you apply and with a quick verification of your KYC requirement, your Demat account is activated. You also get the facility to open a trading account, for the seamless operation of buying and selling securities, connected to your Demat account.
To invest in the stock market, a Demat account is absolutely essential and mandatory. Moreover, the perks of a Demat account stretch right from the ease of opening one to great secure ways of holding stocks and enabling easy investment to get you good returns. These are some of the main reasons why the number of Demat accounts is rising by the day. Here are some of the pros of having a Demat account in a little more detail:
Several individuals realise the benefits when you open a Demat account. These are the rewards you get, besides just easing the trading and investment process. With a decent Demat account, you get access to the latest information in the markets, and with no minimal trading rules, anyone can start trading conveniently.
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