If you have started investing (or even just are reading up about investing!), you must have come across the term ‘demat account’.
Today, we thought we’d share some important things about demat accounts that young investors absolutely need to know about! Let’s get right to it!.
A dematerialization account, more commonly known as a demat account, eliminates the need for physical handling of shares, bonds, mutual funds, stocks, or securities, by instead holding them all in one electronic account. This means all your investment assets can be handled through a demat account, that will electronically hold your assets and update you on their status – just like a savings account – but for your investments.
Trivia: Before 1996 all shares and securities were issued physically and traded in the stock market. SEBI introduced the dematerialization concept 27 years ago, so anyone with access to the internet was able to buy or sell all forms of assets using their single demat account.
It is important to note that you can choose to trade in shares and securities or make mutual fund investments using traditional means as well, and you do not need a demat account for the same. But, should you opt to do so digitally (which is just more convenient!) – you must have a demat account.
Now that we understand the basic meaning of demat accounts, let’s take a look at some of its key features –
Here are some of the best demat accounts in India today –
Most of these demat accounts in India will equip users with the general features that are associated with electronic holdings. Using a demat account can therefore be extremely beneficial for the smart investor!
Here are some benefits that you can experience if you are using a demat account for your investments –
The benefits of using a demat account are overwhelming – and these benefits are important to a lot of investors, especially the ones who are trading large sums of capital.
Opening a Demat Account
The process of opening a demat account in India has been streamlined to make it as efficient as possible. It can be condensed into a few simple steps –
In four simple (and one-time) steps, you can receive your account details and start trading through your demat account.
Keep in mind that anyone who wants to invest in the Indian stock market or hold securities in electronic form needs a demat account. Whether you’re a long-term investor or a short-term trader, a demat account is essential for participating in India’s capital markets.
The process of opening a demat account can be condensed into a few simple steps – Choose your demat account → Submit an application form with required supporting documents (like PAN and Aadhar, for example) → Complete your KYC verification → Agree to the boilerplate Terms and Conditions.
Yes. You can opt to go through a brokerage firm and create your demat account online.
You will be required to fill out an account closure form and complete all compliance formalities to close a demat account in India.