While most Indians have their bank account in some form or another, like a current bank account or savings bank account, there is always that lack of awareness when it comes to the Demat account benefits. According to the data from SEBI, the total number of Demat accounts was 384 million in 2018. This might be a significant factor to consider; compare this to the fact that more than 80% of the population will have a savings or current account. It shows that the Demat account online was lagging behind.

One of the major benefits of the Demat account is that it can facilitate trading. This seems to be the very first step towards share trading, and you need to open a Demat account for that. Even though many people wish to invest in securities and shares, most people don’t have any idea about the accounts which will have to commence that sharing trading value. So, understanding the perks associated with the Demat account will help most people to understand the norms and benefits involved.

Understand Demat account:

Even before you plan to address the share trading platform, you need to open a Demat account with DP, which will be brokerage firms, banks and financial institutions.

  • Also known as dematerialized accounts, here, you get the opportunity to convert the physical securities and shares into the online sector and keep it in electronic format.
  • Previously, investors were given their shares as physical possessions. But, in 1996, the SEBI passed regulation to have Demat accounts as a compulsory note for the stock market.
  • So, next time you want to start trading in the stock market like NSE or BSE, you have to get a Demat account under your name.
  • Demat accounts will work similarly to the bank account. So, anytime you are planning to make a purchase or sale, the shares will either be credited or debited from your account.

It is also important to know the number of shares you can purchase or the profits that you might get from the investment. For that, heading towards the Options Trading Calculator might be a probable option to select.

Securities-related to online Demat account:

The online Demat account will hold multiple securities under your name. Understanding those beforehand will always provide you with the best response you could have asked for. Those will be:

  • Non-convertible debentures
  • Government bonds
  • Mutual funds
  • Initial Public Offering or IPO
  • Stocks or shares

The advantages that follow:

If you think about it, there are various advantages associated with the Demat account. Learning about them beforehand will help you big time.

  • You will enjoy easy accessibility
  • Get the values of easy dematerialisation and rematerialisation
  • Mitigating the risk factors
  • Aids for opening one trading account
  • Easy operation
  • Saving up stamp duty
  • Easy money on share liquidation

Auto-credited stock dividends, refunds and interest values. So, it is not hard to state that if you want to trade in the stock market, you might need a Demat account by your side. It will make fund transfer a whole lot easier for sure.

By Richard