Investments have become a necessity, irrespective of your financial goals. Those who have been in the investment industry must have suggested the same. The best place, to begin with, is stock markets. One right step can earn you substantial returns. However, a wrong move can turn the tables around. If you seek to invest in the share market, one of the prerequisites is opening a Demat Account. While you attempt to understand the process of one, it can get challenging to understand the other. But both are inter-connected.
We have simplified this process and explained what is Demat Account all about through some pointers –
- Definition: It stands for dematerialisation. Here, investors need not store their certificates and other financial documents in physical form. They are held electronically in the Demat Account. If you want to take that plunge in the share market, apply for the Account with your broker. They come handy for the credit and debit of trading transactions.
- Usefulness: The paperwork has reduced drastically with a Demat Account in place. You can do away with all the confusions, and since there is a hassle of document maintenance, there are lesser chances of losing them. The concept of Demat came into existence under the Depository Act of 1996. This way, it has become easier to deal with stocks conveniently.
- Advantages: There are hosts of benefits of Demat Account. Some of them are as follows –
- No stamp duty on transfer of securities
- One Account for debt and equity investments
- Low overall transaction costs with Demat Account
- Accessible for traders owing to less paperwork
- Facilitates immediate transfer of securities
- Avail of auto credit facility of Public issue refund to the bank account
- Hold record of all transactions as you receive them via emails
- High liquidity chances as you can sell securities any time of the day
- Change address, register Power of Attorney, etc. by instructing the Depository Participant (DP)
- Application: The next step is how to open Demat Account? You need to have some documents and details handy for the same such as PAN card which is mandatory. You also need to visit the broker for personal verification purpose. Only NRIs and foreign expats have the privilege of distanced verification. They, however, need to send the documents along with the application to the broker.
- Charges: Every financial instrument have some charges associated with them. The initial costs are opening of Account (which are refundable), the credit or debit fees, and the maintenance expense which you pay either monthly or annually.
