Having a Demat account is among the important things you must know about the stock before starting to invest in the share market. It is an online method of holding securities like Shares and Bonds. Moreover, one cannot even invest in the share market without a Demat account. First, to begin investing, one has to open demat account. Opening a Demat account is an easy process through which all investors can easily trade in the stock market.
Reasons for opening a Demat account before you start investing
It is very good to open a Demat account much in advance before you begin to invest in stocks. It offers quite several advantages that include but are not limited to the safety of shares and easier transactions. Let us now delve deeper into these benefits.
- Safety and security on holdings of shares: Shares, by convention, are held in physical certificates, but this is imprudent from a practical perspective. That means no paperwork, reducing the possibility of your share certificates being misplaced, nicked, or lost. More importantly, it will offer you opportunities to keep all your various investments safely at one source in electronic form, which could be very easy to keep track of.
- Easy and fast transactions: Buying and selling shares has been time-consuming, and paper certificates have complicated things. A Demat account ensures that everything about your transactions is done electronically. That means you can purchase or sell your stock with less time-wasting compared to olden times. This easy process also helps in reducing human errors. Once your order is placed, it is automatically executed, and the shares are transferred to your account.
- Reduced frauds and errors: By nature, a Demat account is digital and thus more secure than holding shares physically. Physical shares risk being forged, fraud, or lost. If your shares are in paper form, they may easily be misused or stolen, which you cannot really afford. Moreover, a Demat account ensures that your holdings are safely recorded in the main database and maintained per modern security protocols.
- Lower transaction costs: Opening and maintaining the Demat account will save you money in the future. Earlier, when it was a physical holding of the shares, there were many hidden costs, such as stamp duties, handling charges, and delivery fees. These hidden fees added up fast and made it expensive to invest. Moreover, Demat account facilities enable trouble-free account and brokerage transfers.
- Convenience and the ease of managing portfolios: The tracking and monitoring of your holdings are accessible through their online interface. By availing yourself of the online interface, you get your entire portfolio on your single screen, which guides you in making informed decisions to purchase or sell or further holdings in shares. A Demat account also facilitates multiple investments with much ease.
Final words
Ultimately, a Demat account is one major step towards starting your investment cycle in stock market. A Demat account makes it easy for an investor to operate a portfolio and keep oneself updated with changes for smoother trading.
