You probably have a savings account in your bank that you can access anytime. It keeps your money safe. A Demat account serves a similar purpose for an investor. If you invest in stocks, you need a Demat account to hold your shares and securities. Let’s take a look into at what Demat account is and how a free Demat account work.
What is a Demat Account?
The term “Demat” stands for a Dematerialized Account. When you buy stocks, your shares get stored in your Demat account. Whatever investment you make, whether in government bonds, securities, stocks, or mutual funds, a Demat account keeps them in one place.
Two depository organizations maintain all the Demat accounts in India: the NSDL and the CDSL. Demat accounts reduced the chances of theft and malpractices by holding the securities digitally. It also makes the account verification and approval methods super quick and convenient.
Advantages of a Demat Account
There are 4 advantages to opening a demat account. We’ve listed them down below:
1. Convenience: You can trade and invest online from the comfort of your couch without going to the stock exchange for transactions.
2. Safety: It provides security from theft, loss, damage, and forgery of shares and securities. You also have all-time access to your account.
3. Ease of Transfer: The trading process gets faster. You can instantly transfer your securities with just a few clicks.
4. Low fees: There are no stamp duties for settlements. Therefore, your transaction costs reduce. You can save more money by opting for discount brokers for brokerage costs.
Read More: How To Get Your Money Back From Unclaimed Deposits In Bank Accounts, FDs
How to open a free Demat Account?
- Hop on to the online trading platform and fill in your details. Give mandatory information like your email address and phone number.
- Submit supporting documents like PAN card and bank account details. Provide information about the account that is active and used for transactions.
- Get your KYC verified online for safe and secure transactions.
Read More: PAN Card: Know How To Update Your Name And DOB Online
Things to keep in mind while opening a Demat Account
1. Account opening fee: There is a one-time fee you have to pay to the stockbrokers at the time of opening the account, which is non-recurring.
2. Linking your bank: Link your bank account with your Demat account. This step is crucial for trading so that whenever you buy or sell shares, the money automatically gets debited/credited from/to your bank account.
3. Integrate your trading account with Demat Account: Create a trading account before you open a Demat account. A trading account is where you do all the financial transactions of buying and selling securities.
A Demat account is a prerequisite for trading as it stores all your securities and shares. It protects your shares from malpractices and theft electronically.
Unsure as to where to create your account? Dhan gives you 4x leverage over 950 stocks, connects you to trading panels and lets you access shares, commodity currency and more. Open a free Demat account in just one click with Dhan’s trading app.
Disclaimer: The material and information contained are for advertorial purposes only. India Today holds no responsibility for the content written on the website as a basis for making any business, legal, or any other decision. Any reliance placed on such material is at your own risk.
