In the year 1996, Demat accounts were introduced, before that physical securities or stocks were issued and even traded. The major benefit of such an account is that investors can trade their securities in an electronic form. This paves way for the entire process to be cost efficient, investing, and convenient.
The best Demat and trading account in India offers several benefits
With physical securities a possibility of thefts or loss could arise. Along with it fake securities or bad deliveries pose a lot of risks. When you open a Demat account such risks are completely eradicated. An investor possesses an ability to maintain their securities in an electronic form.
To maintain physical securities is a tedious job. In addition to keep a track of their performance is another major challenge. With a Demat account it makes it really convenient to hold and with a single account all investments can be tracked.
With physical securities buying and selling took place in specified quantities. A privilege to deal with a single security or even odds lots was not available. With the help of a Demat account such an issue does not arise.
Reduced time and costs
Owning physical securities poses additional expenses in the form of handling charges, stamp duty with a host of other expenses. With the help of a Demat account these expenses would be completely eliminated.
Because of reduction of paper work the complete time to finish a transaction is reduced. This reduction in time ensures that an account holder is able to make more purchases. Even the sale of securities is over at a complete shorter time frame.
With Demat accounts they are lucrative, simple and hassle free. For an investor they are an important part of financial planning.
The reasons why a Demat account is a must?
To convert physical securities into an electronic one poses to be an optional affair. The option is on the investor to hold securities in a form they desire. But to monitor physical securities is a difficult job when you compare it to digital ones.
How to open a demat account and what are the charges?
To open a demat account first and foremost approach a registered DP. They act as a liaison between a depository and an investor. On the websites of CDSL and NDSL you will find the list of DPs. To open up a Demat account you need to furnish your
- Personal identification document
- A copy of your PAN card
Once you submit a complete application form it takes a week or so to open a Demat account
As per depository participants the charges of opening a demat account varies. Though some DP‘s levy a charge on opening such accounts, but certain banks do not have any charge. Apart from account opening charges there could be some other fees like annual maintenance charges.
To reap in benefits of a stock market, you need to open a Demat account. Before you plan to open one research about the fees charged.