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Why Should You Have a Demat Account?
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Are you a beginner and thinking of investing then you might be wonderingĀ why should you have a Demat account?
Well, the answer directly points towards more security, easy accessibility of shares and a lot more.
If you are the one who is willing to invest in stocks, then it is necessary to have a Demat Account.
To open a Demat Account it is mandatory to link your Aadhaar UID with the Demat account and to fulfil other KYC norms.
Once you are able to open the Demat Account with any of the stockbrokers (discount broker or full-service broker), you would be able to buy and sell shares online.
Also, you can open multiple Demat accounts with a different depository participantĀ as well, if you wish to.
Do You Need Demat Account for Mutual Funds?
Although, an investor does not need a Demat account to redeem mutual funds but having one offers you many benefits.
It gives you access to buy mutual fund shares and save them in an electronic form in your account.
Thus, with the electronic deposit of securities, you can prevent the investor from holding shares in the physical form.
You can now open the Groww Demat Account to invest directly in the mutual fund.
Want to open the Demat Account?
Another way of investing in mutual funds other than opening the Demat account is to buy it directly from the company.
Contact the respective company directly and bypass the need for opening an account. Also, it prevents you from paying the brokerage charges.
Thus, by skipping the Demat account you can avail many benefits like gaining extra control, taking responsibility towards your share, and accountability over the mutual fund.
But with the account, investors are able to keep their physical shares in the secure electronic form.
With this online gateway, it becomes easy for investors to review, select and compare funds easily thus helping them to manage their accounts.
Importance of Demat Account
Other than this, there are many reasons why to have a Demat Account.Ā
1. Safe & Secure: The physical shares were difficult to maintain and have the risk of getting misplaced, but with the Demat Account, investors are able to maintain their shares in an electronic form thus making an investment much safer.
Other than this, it adds on an extra layer of securities, regulations and statutory compliances thus making it one of the best and safer options for investors.
2. Indispensable for Trading: With the Demat account, you would be able to trade in the stock market and allow you to do stock trading electronically. It allows you to settle trade in Demat form on any of the stock exchanges.
3. Reduces Hassle: Handling too many financial products like debt securities, mutual funds, equity, etc separately makes it difficult and confusing for investors. With the electronic account system, one can get rid of such hassle and allow them to preserve multiple securities in one single account.
Also, it makes it easy to keep track of all the financial products under one roof.
4. Lower Costs: To maintain and handle the physical certificates of shares you have to pay any additional costs like stamp duty etc. But with this, you can eliminate all such charges and reduce the cost of trading in shares.
5. Quick and Convenient: To deal with physical securities you need to visit your broker to buy or sell shares but with the electronic account system you can prevent yourself from making a frequent visit as the whole process can be done and managed online, eventually reducing the chance of manual errors.
Is Demat Account Necessary for Trading?
Apart from mutual funds, is Demat account is necessary for trading in the share market. Here, share market trading involves buying and selling shares.
If you are looking for buying and holding your position for mid-to-long-term, then yes you need a Demat account, but when it comes to intraday trading, where no credit of shares is involved in the Demat account, having a dematerialized account makes no sense.
So, set your goals and pick the account that is more appropriate to meet your trading needs.
Conclusion
Hope you all get to know why should you have a Demat account?
The reasons are many more, but in general, it makes trading tech-savvy and convenient.
So, now who wants to gain experience in trading and share market can open a Demat account with any Depository Participant.
Make sure you have all the documents required to open the account.
In case you want to grab more details, feel free to contact us
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