Simply stated, if you wish to trade in shares, the foremost thing that you need to have is a Demat Account.
A Demat Account is a special account maintained by National Securities Depository Limited and Central Depository Services(India) Limited offers electronic storage for the securities you possess.
Just like a bank account securely stores one's cash possessions, in the same way, the Demat Account holds one's shares and securities in electronic format.
Why Do You Need a Demat Account?
Simply stated, if you wish to trade in shares, the foremost thing that you need to have is a Demat Account.
Traditionally shares were held in the form of physical share certificates but the tedious and arduous approach is cumbersome and is prone to several potential risks. As now one can easily open demat Account online, there is no point in going with the traditional approach!
So, now let's also have a quick look at the other benefits rendered by a Demat Account:
Zero Theft and Forgery
The physical share certificates are vulnerable to various damages/tampering and the process of transferring such 'papers' involves a lot of paperwork, which also results in errors and delays. Demat accounts not only offer better secure storage but also simplify the transfer process.
Easier Tracking
By having a Demat Account one can readily keep track of all the records and can manage the shares and all online trading very easily. As the records are securely stored in an electronic format on digital servers, the need for manual tracking of physical documents is eliminated.
Round-the-Clock Easy Access
Demat account provides the freedom of accessing all the records through any device- anytime and anywhere. The account holders can check anything related to their portfolio through laptops or even smartphones, and this accessibility accounts for better flexibility in monitoring and managing their portfolio.
Easy Storage of Different Assets
Demat Account is not only limited to shareholdings but it can also store other assets like mutual funds, government securities, ETFs, bonds, and others. One can also apply for the IPOs and FPOs through the Demat account. Such all-inclusiveness facilitates better diversification opportunities, along with better portfolio management.
Automated Credit of Earnings
Timely corporate actions like stock splits, rights and shares, and bonus issues are automatically updated in the Demat Account. This facility ensures that traders recover any earnings or profits on time.
Transparent Pricing Structure
Trading with a Demat account comes with transparent pricing, and everything is interpreted upfront. Contrastingly, the traditional physical certificate approach incurs many hidden expenses like handling fees, stamp duties, and other brokerages that are not predictable.
Conclusion
The traditional physical certificate approach is no longer in practice as it had several issues such as theft or loss. This is changed by the electric Demat account. Easy storage of different assets, 24*7 accessibility, easier tracking, and transparent pricing with automated credits are some top advantages of trading with a Demat Account. So get a Demat account online and start trading today!
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