Before the advent of electronic trading, physical copies of share certificates were given to the traders whenever they purchased shares. The documents of each of these securities had to be kept safely due to the risks associated with physical documents. Moreover, the documents had to send via post or manually, and this required extra time and money.
However, with the help of Demat accounts, the Indian share market was able to set up a fully automated system that reduced paperwork and brought transparency in the trading process.
What is a Demat account?
When you trade online, you buy and sell shares. When you buy a share, the share needs to be stored somewhere. A Demat Account stores these shares in a digital form. Demat accounts can also be used to hold mutual funds, bonds etc.
Here’s how Demat account makes trading easier:
Since shares are stored in a digital format, they are much safer. You need not worry about issues such as theft, damage or forgery associated with physical documents.
Access from Anywhere
A Demat account can be accessed from anywhere through mobile, laptop, or PC. All you need is an internet connection and the credentials required to operate your Demat account online.
Easy transfer of shares
With a Demat account shares can be transferred from one Demat account to another very conveniently. Since the shares are in digital format, they can be transferred conveniently with a few clicks on your mobile phone. No paperwork, no hassle.
Store Mutual Funds, Bonds, etc.
A Demat account not only stores your shares, but it can also store mutual funds, bonds, Exchange traded funds, etc. When you participate in online trading, you can buy these assets and store them in your Demat account as well.
All shares at one place
With the help of a Demat account, you can get an overview of all your investments in one place. You can keep a track of all the shares, mutual funds, bonds, etc. that you have bought from the share market. Imagine the convenience to have all these records in one place that makes tracking them easier.
The greatest benefit that Demat account has brought to online trading is reducing the load of paperwork. With the shares being stored digitally, you can have 1000s of shares at your fingertips with absolute ease of storage or transfer.
Opening a Demat account online
To open a Demat Account, search for online stock brokers. You can open a Demat account with a full-service brokerage firm or with a discount brokerage firm. Full-service brokerage firms provide you various services, like trading recommendations, expert advisory, research reports, etc. However, you will have to pay a percentage based brokerage depending on your trading volume. This might increase your brokerage cost as you make multiple transactions.
On the other hand, discount brokers provide the option to trade at a flat fee per order irrespective of the trade volume. Next, you need to check the Demat Account charges. In most cases, there will be two charges you need to check – the Demat Account opening charge and the Demat Annual Maintenance Charge (AMC). Some brokers provide you the facility to open a free Demat and Trading Account and with a minimal or zero Annual Maintenance Charge.
Once you have decided on the choice of broker, you will have to fill an online form where you need to provide details like your name, phone number, address, PAN Number, etc. Then you need to upload the basic KYC documents such as Aadhar Card, Address Proof, and Passport Photograph. You can complete and sign the form online through Aadhar linked mobile number. An OTP is sent to you to authenticate the details. After the final submission, your broker will confirm the opening of your Demat account. They will provide your login details to log in to your Demat account.
Start benefiting from the stock market opportunities by opening a Demat account today. It makes life easier and simplifies online trading to a great extent.