7 Benefits Of Demat Account Every Investor Should Know

What is a Demat Account?

Demat Account helps the account holder to hold the securities and shares in an e-form or electronic format. Keeping shares in electronic form is very beneficial as you do not have to worry about it once in the Demat account. Moreover, it helps to make the monitoring, holding, and trading of shares easier. It also helps for cutting costs and making the transaction faster. Additionally, it acts as a bank account and makes the holding of shares convenient.

It is similar to a bank account as a bank account holds cash and a Demat account holds shares and securities. In addition to that this account enables to hold all investments like shares, mutual funds, bonds, ETFs, or government securities. Moreover, you can trade on so many investment products or securities via this Account. No paperwork makes trading and investment easy and hassle-free. The advantages of corporate rights share, stock split, etc are directly updated or availed in the account.

Why Demat Account?

A Demat account is a good choice if you want to protect your holdings from theft or damage. The account will convert your holding of shares into Electronic Format and you will not have any risk of damage, loss, or misplacement. Additionally, if you want to trade in the stock market in India you need to have a Demat account as per SEBI. If anyone wants to invest or trade on the stock market with a lot of opportunities of earning good returns.

Benefits Every Investor Should Know

Decreased Expenditure: The cost of using this account is lower and it will save you expense cost of many things. Things like paperwork, stamp duty, transfer cost that is there in the physical form of shares. All these cost reductions will help you gain more profit as the money you save while using a Demat account is also a profit. There are many such benefits of using this account over physical shares.

Seamless trading and transfer: It is very difficult to transfer physical certificates, while the Demat account allows transferring the securities in a quick and secure way. Moreover, the trading is seamless and hassle-free which will make you relieved about making transactions. Additionally, the order processing time is relatively lower which will save your time as every second matter while trading.

Safe and Secured holdings: Your holding is absolutely safe in the Demat account due to the 2FA (Two-Factor Authentication). It eliminates all the risk of theft or forgery that can take place in the physical holding of shares. You are not prone to many risks like theft, damage, or loss. It is safer to keep your holdings in a Demat account and being tense free about it.

Easy Access: Demat account enables easy access and monitoring of your holdings as they are in electronic form. Moreover, higher accessibility is provided by a Demat account than keeping your holdings in physical form. Also, there are multiple access points available when you have a Demat account.

Freezing Demat Account: You will get the facility of freezing the specified quantity of securities in some of these accounts. This facility is very beneficial as you can freeze the ones you want to keep for the long term and you avoid mistakes of selling it or you will be less tempted to sell them. Moreover, the Demat account holder can also freeze their whole Demat account for a specified time. It will help as you can stop all transfers of money that is Debit or Credit cards for a specified period. It will be beneficial if you want to take a break for some time and restart back later by unfreezing.

Receiving Dividends and benefits: Demat account makes the process of receiving dividends, interest, or refunds quick and easy. After using this type of account you can easily avail the benefits in no time which took a lot of time before. The benefits are auto-credited into your account and are very convenient. Moreover, the updates like stock splits, public issues, bonus issues, etc are done via ECS (electronic clearing services)

Easy way to dematerialize your securities: If an investor has shares in physical certificate form, they can instruct their depositary participant to convert them into electronic form. Moreover, if they want them back to physical form even that can be done at your request.

How to Open a Demat Account?

Opening a Demat account is very simple and there is minimal paperwork required. These are the steps for opening a Demat Account:

Step 1: Fill in the form for the opening of the Demat account. It should be filled properly and all authentic information should be used.

Step 2: Submit all the required documents. All the documents that are asked should be submitted and each of them should be authentic. Document includes:

Proof of identity

Proof of Address

Income Proof

Pan Card

Photographs

Step 3: Finish the in-person verification (IPV) which is done in-person as the name suggests.

Step 4: Now get an ID or account number.

If you are going for the online process for a digital Demat account these steps are similar:

Fill in the form for the opening of the Demat account, Submit all the required scanned documents in digital form, Finish the in-person verification (IPV) and get an ID. The only difference between both the process is that this one is done through digital channels.

Conclusion

Now the days of holding the shares in physical form are long gone. As the technology advancement takes place you need to update yourself accordingly. Moreover, the Demat account will enable you to buy/sell stocks, invest in equity and it is mandated by SEBI for every transaction in the market. Additionally, benefits like the security of shares, lower cost, multiple access points, easy trading, and no theft will make you have a Demat account to make your life easier. It is the ultimate tool to trade efficiently and conveniently.