A demat account or dematerialized account is an electronic account that holds your securities such as stocks, bonds, mutual funds, and other securities in an electronic format. It has revolutionized the Indian stock market. Here are 3 reasons why a demat account is so crucial and how to open one:
1). Safe and secure securities storage
One of the most significant reasons to have a Demat account is to ensure safe and secure securities storage. Before Demat accounts, investors held physical share certificates prone to damage, theft, and loss. A dematerialized account assures you that your securities are stored electronically, eliminating physical damage or loss. Demat accounts are maintained by depositories such as National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL) and are regulated by the Securities and Exchange Board of India (SEBI). This ensures that securities held in Demat accounts are safe and secure while you plan to open trading account online.
2). Easy and convenient trading
Another reason a Demat account is a necessity is that it enables easy and convenient securities trading. With a Demat account, you can buy and sell securities online through your broker. This eliminates the need for physical share certificates, which were required for trading in the past. Demat accounts enable investors to trade from anywhere and at any time. This makes it convenient and easy for investors to manage their investments once they know how to make demat account.
3). Access to corporate benefits
Demat accounts also provide investors with access to corporate benefits such as dividends, bonus shares, and rights issues. When companies announce dividends or issue bonus shares, these benefits are credited directly to the investor’s Demat account. This eliminates the need for investors to physically collect dividends or bonus shares from the company. This is a convenient feature of a Demat account that makes it easier for investors to receive and manage corporate benefits. This is during the process of opening an online trading account.
The other reasons to consider a Demat Account
The demat account offers several other benefits to investors, which gives them enough reasons to consider it. Once you know how to make a demat account, you would opt for it soon. Now, check out these reasons:
- Convenience: The demat account eliminates physical share certificates and facilitates easy share transfer.
- Safety: The digital format of the demat account ensures your securities’ safety and eliminates the risk of loss or damage. You can also benefit when you open an online trading account.
- Easy tracking: The demat account allows you to view your holdings, transactions, and other details online, making it easier to track your investments.
- Corporate benefits: You can receive dividends, bonus shares, and other corporate benefits directly in your demat account.
- Pledge securities: You can pledge your demat securities as collateral for loans.
In conclusion, a demat account is a valuable account for investors. And you have so many benefits, which you can also find when you open an account for online trading.