Demat – an acronym for dematerialization – allows investors to store share certificates and assets electronically rather than physically. A Demat Account is similar to a bank account. In the same way that bank accounts keep money electronically, Demat accounts hold shares electronically. It simplifies owning investments such as stocks, bonds, government securities, mutual funds, investments, insurance, and ETFs, reducing the difficulties of physically managing and keeping shares and related papers. According to SEBI, to trade in the stock market, you must have a Demat account. When you buy or sell securities, it gets reflected in the account. All the buying and selling happens through a Demat account.
Benefits of Opening a Demat Account Online
A Demat Account is a must for stock market investors since it stores your financial items electronically. As a result, it lowers risk and costs, shortens transaction times, and boosts liquidity. Kotak Securities helps an investor to open Demat account online with a hassle-free process.
Here are top 10 reasons why you should open a Demat account
Ease transfer of shares
With the use of a Demat account, users may conveniently transfer their shares in no time. As a result, having a Demat account simplifies and expedites the entire procedure.
Furthermore, stocks can be transferred from one Demat account to another using a delivery instruction slip (DIS) or a reception instruction slip (RIS) (RIS).
These slips will allow consumers to fill in all of the pertinent and necessary data for a flawless transaction.
Dematerialization of securities
If an investor has physical certificates, they must submit explicit instructions to the depository participant (DP) for them to be converted to electronic form.
Similarly, if investors have electronic form certificates, they may quickly convert them to physical form by requesting them.
Freezing Demat accounts
The holder of a Demat Account can freeze a certain kind or number of securities in a Demat account. They also can freeze their Demat account for a set length of time. By freezing, money will be prevented from being transferred from any Credit or Debit card into a certain Demat account.
Receiving benefits and dividends
The establishment of the Demat account has greatly benefited many people. They’ve replaced the time-consuming process with straightforward means of receiving interest, capital, or dividends. Moreover, that money or dividends are credited to the Demat account automatically. Moreover, when updating the investor’s account with bonus issues, stock splits, and public issues, the Demat account method is highly convenient because it is done via an electronic clearing service (ECS).
Quick and easy trades
The main advantage of having a Demat account is that it provides quick and simple access to their investments and statements via net banking.
Furthermore, these facts are easily available from any location using a smartphone, computer, or another electronic device.
The Demat account has assisted users in reducing the time necessary to complete a single transaction. In addition, the time savings enable the account to make further acquisitions and sell security holdings more efficiently and in less time.
In today’s world, having a Demat account is essential for everyone who wants to invest in the stock market. The introduction of the best mobile trading app makes it possible to trade anywhere and anytime globally. There are many best mobile trading apps available in the market that can help you to make your trading career easier.
Physical certificates used to come with a slew of extra fees, including processing fees, stamp duty, and various other charges. A user does not have to pay any additional charges with Demat accounts. It, in turn, decreases the cost of owning stock in a company.
There was always a serious risk of loss, theft, forgery, or mutilation with physical share certificates. But with the introduction of Demat accounts, these risks were eliminated.
Before introducing Demat accounts in the stock market, it would take many days to settle a single transaction in the stock market. However, using a Demat account, a user may now purchase or sell daily, and the transaction is resolved instantaneously after the trading day.
A major reason for opening a Demat account is that the securities held in a Demat account can be pledged as collateral for obtaining loans from a number of banks.
Opening a Demat account is now required for any Indian to begin their trading career. Users with a Demat account can benefit from the capital market by investing in shares, mutual funds, and commodities. In addition, having a Demat account provides a user with perks and assured earnings on their shares. You can visit Kotak Securities and register a Demat account online to start trading and earning profits.