Today, through this blog post, we will know what is a demat account? if you have invested in the stock market, then you can become a shareholder by acquiring shares of that company. And the shares you have received, you used to get those shares in paper form. There was a risk of those shares being stolen or lost. That is why the government of India introduced the demat account in 1996. Due to which investors can keep their shares safe in electronic form.
What is a demat account?
Demat account is used to keep shares, bonds and other securities purchased from the stock market in digital form. You can keep all the shares you have purchased safe in the demat account. And you can easily use the online platform to trade in the stock market. In simple words, a demat account is type of your bank account. The account in which your shares are kept in digital form or demat form.
As you know, SEBI has been given the power to regulate the stock market. Similarly, to ensure the security of the demat account, two depositories of India such as NSDL and CDSL have been given the responsibility to keep an eye on the deposited shares and the credit-debit in all the accounts.
And one is the depository participant which you call the stockbroker. This stockbroker is a medium between the investor and the stock exchanges. Which helps you to open a demat account. And it also gives you a trading app, through which you can invest or trade in any share in the share market.
How to open a demat account?
To invest in the stock market, it is very important to open a demat account. And for this you have to choose a good stockbroker. All stockbrokers provide you the facility to open a demat account online. For this you need some documents.
- Aadhar Card
- Pan Card
- Bank Passbook
- Cancel Cheque
- Bank Account Statement
- Passport Size Photo
What are the benefits of a demat account?
- Demat account keeps your shares and other securities in the safest condition.
- Trade settlement in demat account is completed in just one day.
- In demat account you can buy even and odd numbers of shares.
- You can store all types of assets in a demat account, such as shares or bonds purchased from the stock market and investments made in mutual funds, and you can easily view all transactions made.
What are the disadvantages of a demat account?
- You have to pay annual maintenance charges (AMC) only if you do not use your demat account regularly.
- You have to open a demat account with a good stockbroker, otherwise you may incur loss.
- Since demat account is online, you cannot choose offline services.
Disclaimer: The information written in this article is for educational purposes only. If you want to invest in the stock market, you should learn about the stock market yourself or take advice from a financial advisor and certified expert. The stock market is subject to risk. Before making any investment, you must take expert advice.
conclusion
In this article, we have explained in detail to all you regular readers what is a demat account? And we have also given you other information very much. You will like, share and comment on this article.
Read Also: Why does Warren Buffett say, when investors are afraid to invest money, you invest.
FAQ
1. What is a demat account?
Demat account is used to keep shares, bonds or other securities purchased from the stock market in digital form. You can keep all the shares you have purchased safe in a demat account.
2. What documents are required to open a demat account?
To open a demat account, you need all these documents, Aadhar card, Bank passbook, cancel cheque, Bank account statement, Pan card and Passbook size photo.
3. What are the benefits of a demat account?
Your shares and other securities are kept safe in the demat account. And trade settlement in the demat account is completed in just one day.