The Digital Age of Investing: Leveraging the Benefits of a Demat Account

The digital age of investing has finally arrived across the world, and India is no exception. Did you know there are around 11.5 crores of registered Demat accounts in the country? Most people are using online Demat accounts to hold securities and reap higher returns.

A demat account has multiple advantages, from high security to low stamp duty. Quite often, new investors do not know about the online demat account, in these cases, they might not leverage the power of digital investing via a demat account. Let’s delve deeper to learn how to leverage the benefits of a Demat account.

Understanding the meaning of a Demat account

 

Most of you must be familiar with a trading account used to buy and sell securities in the share market. You might not buy and sell securities in the share market within the same day or immediately. There will be instances where you might hold securities for long-term. There are several hassles associated with holding securities in their physical form. You might have to carry several documents and store them safely for physical trading. In this new era of digital investing, you can store financial securities in electronic format using a Demat account.

 

The process of Dematerialisation is converting securities into electronic format and storing them securely. If you have bought shares via a trading account, they will be converted into electronic form and stored directly in your demat account. You can hold onto shares as long as you want before selling them to make a profit. Online market trading becomes easy when a demat account is linked seamlessly with a trading account. Securities bought via a trading account are immediately transferred into the linked demat account. Three types of Demat accounts are available for investors in India:  

Regular demat account for common residents of India.
Repatriable demat account with foreign fund transfer facility (for NRIs).
Non-repatriable demat account that cannot facilitate abroad fund transfer.

Understanding and leveraging the benefits of a Demat account

 

Having a Demat account is mandatory for holding securities and selling them later. Here are the benefits of a Demat account you must leverage for better results:

Secure holding of financial securities

A demat account allows you to hold securities safely without any risks. You might go through more hassles in storing physical certificates. Not to forget, physical certificates might get stolen, damaged, or lost with time. With a Demat account, you don’t have to worry about the storage or safety of financial securities. Instead, you can focus on building a diverse portfolio with a Dematerialisation account.  

A Demat account also enhances the trade initiation and settlement process. You do not have to wait indefinitely for the trade to be settled with a demat account. The entire process of trade confirmation and settlement happens in quick succession. If you want to use market movements and intraday trading opportunities, a Demat account will help. The settlement process for physical trading might take time, and you might miss out on share market opportunities.

Access to multiple financial securities

Shares, bonds, derivatives, currencies, and other financial securities can be stored within the same demat account. It might not be possible with physical trading, where you store different certificates for each financial security. A Dematerialisation account gives you a diverse portfolio with different financial securities.

Efficient corporate actions

Investors indulge in several corporate actions like bonus and dividends issues. With a Dematerialisation account, these actions can be completed with a single tap. The same cannot be said for physical trading in India. For example, you might have to submit applications and other documents physically for dividends issues. Not only is this process lengthy, but also tedious for investors. With a demat account, investors can take these corporate actions quickly and enjoy the benefits.

Margin trading benefits

Many stockbrokers offer additional funds to investors with a demat account. Additional funds can be used to purchase securities and magnify their profits. For example, let us say you have Rs. 5,000 to buy shares in the stock market. With margin trading, you can raise additional funds and purchase more shares in the stock market.

Enhanced integration with trading platforms

A demat account can be easily integrated with a trading platform for trade monitoring and research. Also, investors can access real-time marketing information to make informed investment decisions.

In a nutshell

In this era of digital investing, having a demat account is mandatory. With a demat account, you can enjoy numerous benefits like margin trading, pledging, and real-time research. Don’t forget to search for a reliable depository participant to open a demat account in India. Open your demat account and start trading now!

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