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What are the Benefits of Demat Account: Advantages

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What are the Benefits of Demat Account: Advantages & Why you need it

A paradigm shift is visible in the financial market, making everything easier with the technological development across the segments. Dematerialisation is part of such technological development providing the paperless facility to hold their securities in the digital form. Demat account is the invention of such technological change that now become part of every investor in India.

As you know demat account is the part of stock market but need to know what are its benefit and why you need it, so that you make the right use of your demat account. Merely opening a demat account would be not enough to utilize its advantages you need to know various aspects that we are going to discuss today in this article. Before we talk about the advantages of a demat account, let’s revise you don’t know what is a demat account or the Dematerialisation of such an account.

What is a Demat Account?

In simple words demat account is mainly issued by 2 major depositories of India ( CDSL & NSDL). Its is digital in nature and primarily used to store your shares after purchase. Functioning is same as you common saving account where your money parks. As in the saving account any user can deposit or withdraw their money, same in the case of demat account user can deposit or withdraw their shares.

Why Demat Account is Needed?

Earlier any shares purchased from the market can be hold in physical format but SEBI changed this format and now it is compulsory to open demat account for any client who wants to trade in stock market. In other words shares purchased can be hold only in electronic form not in physical format.

Also Read: Things to Consider Before Buying Stocks for Long Term: 10 points

To be more precise for any clients who want to trade in stock market, 2 basic accounts are necessary-

  1. Trading Account- to purchase or sell in stock market
  2. Demat Account- to store your shares purchased from stock market

Your demat account is linked with your trading account you can access it with the unique login password and user ID. Hence, you need to know more about your demat account and what are its benefits and advantages for end-users.

Top 10 advantages of Demat Account:

  1. Dematerialisation of Securities

As discussed earlier basic advantage is to keep shares in electronic form rather than physical format If you have physical shares either convert them now into dematerialized or you can lose their value or it will become worthless.

Also Read: How to Convert Physical Shares Into Demat: Stepwise Procedure

And when you don’t have a demat account it would be not possible to convert and get the ownership of physical securities. In a demat account, you can hold or keep an unlimited quantity and types of securities issued by registered entities in India.

  1. Single Storage for All Securities

Clients deal in all kind of financial products i.e. they have a portfolio of equity, Debt Instruments, Mutual funds or ETF. Biggest advantage of demat account is all products varisties can be hold in single demat account. There is absolutely no need to maintain separate accounts for different products profiles. Clients can open multiple demat account with different brokers as per their needs here is a check- you cannot apply for more than 1 demat account with your pan card with same broker.

How to Open a Demat Account?

If you are interested in investing in various types of securities like equities or stocks, exchange-traded funds, mutual funds, bonds or government securities then you should open a demat account. For fixed deposits, recurring deposits or SIP you need to contact with the bank.

Also Read: How to Open Demat Account: Benefits and Documents Required

To open a demat account you need to contact a broker or intermediaries and depositary participants authorized to open the demat account and offer the facility to open offline as well as online. And now you have to decide where to open a demat account with a bank also a broker, or with a discount broker or full-fledge broker who is offering more diversified investment services.

Where to Open a Demat Account?

Opening a demat account is the whole and sole decision of, however, you can take advice from people already using demat accounts or get their feedback but ultimately you have to decide where you want to open your demat account.

Also Read: Choosing the right broker: Decoding the mystery of lowest brokerage charges

Choose the right discount broker or broking company offering the maximum features along with your demat account and that is at the nominal or lowest charges. At the same time also make sure various other aspects like whether it can be linked with your trading account or you can transfer the securities from one demat account or to anyone else etc.

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