Top Features of a Demat Account Along With Its Benefits

As we know, the concept of the Demat account is similar to the bank savings account. It can be known as a simple digital storage place. The only difference between the bank savings account and the online Demat account is the asset that the latter holds. Our savings money is safe with our bank, and the securities which we buy and sell from the stock market are held in the Demat account. Just like a bank account, we can manage and track our investments here. The Demat account is an account that is used to keep all your financial holdings safely in a digital format. To understand further, the term ‘Demat’ is an abbreviation for dematerialised. The aim of creating a Demat account is to avoid loss or theft of the holdings. Another major benefit of the Demat account is that it makes the process of online trading as simple as just one click on your smartphone or desktop.

The goal of Demat accounts is to make the trading experience smooth like never before. You can trade in the National Stock Exchange (NSE) or the Bombay Stock Exchange (BSE) markets, which are the major stock exchanges in India.

Your Demat account number is required to settle your trade and transaction. But nowadays, one of the benefits of opening a free Demat account is that you don’t need to submit any physical documents or wait for approval from any office. So, even if you are busy and you want to start investing, all you need to do is download an app such as Share India. Start the online KYC process and open your Demat account in just ten minutes. There are a lot of things that a Demat account can offer and eventually provide benefits to trading.

A Demat account is relatively necessary for the new-age trader. These days, you don’t need to have lots of documents, and you don’t need to safeguard any documents. You can get all the records of debit/credit of shares in the Demat account.

Benefits of Opening a Demat Account

Before we get into the benefits of Demat accounts, we must know that opening a Demat account is essential according to the guidelines set by the Securities and Exchange Board of India (SEBI).

The advantages of having a Demat account are:

Takes Less Time to Trade

The Demat account facilitates investors who want to transfer their shares or other types of securities in a short span of time. As a trader, you don’t need to visit any brokerage house or the stock exchange to verify your trade. Everything is online in today’s time, which makes trading decisions fast and secure through the online broker portal. So it’s safe to say that by opening the Demat account, you will get the advantage of instant trading.

Costs Less Money

You don’t have to pay extra costs such as stamp duty or other charges, unlike the olden days, when traders needed to pay handling charges, paper costs, and other transaction charges. Today, things are much better with paperless trading; we can trade at low charges, eliminating all the non-essential charges. The brokerage charges are also low and cost-effective, which doesn’t impact your trade if handled properly.

Less Risky

Today, if you have a Demat account, you can be completely assured about the safety and security of your financial holdings. Holding a physical certificate is quite risky as anybody can steal it, or you can even lose the certificate. But if you hold the financial certificate in digital format, you can access it anytime and use it at your convenience. The depositories take responsibility for providing security for your trades in the stock exchange. There are two depositories, the National Securities Depository Limited (NSDL) and Central Depository Services Limited (CDSL), which regulate transactions. The role of the depository ensures that the trader’s transaction and financial holdings are safe.

Direct Dividends

Dividend refers to a part of the profit that a company shares with its stockholders. So suppose you hold a share of an XYZ company, and this company issues a dividend each year. This dividend is directly credited to your bank account. The dividend payments can be beneficial for your investment. Many investors handpick stocks that often provide good dividends. With an online Demat account, you can buy shares that can provide you dividends and hold these shares for as long as you want. An online Demat account keeps you updated with the stock splits, bonus shares, and other events related to your securities holding.

So these are the benefits of the Demat account, which can let us trade in a hassle-free environment.

Features of Demat account

There are many features of a Demat account, but to start with, we have highlighted the most important ones in this article.

Dematerialisation and Rematerialisation of Physical Certificates

The Demat account allows traders to easily convert their physical certificates into an electronic format, which is known as dematerialisation.

There is also an option to convert your electronic financial certificate into a physical one, called rematerialisation, which has some charges but can be done by your stockbroker.

Freezing Your Demat Account

Many times, investors seek to halt their investment due to several reasons. If you don’t wish to permanently close your Demat account and want to continue your investment after a short break, then you can simply freeze your Demat account. By freezing it, you have to pay a small number of charges per annum. There will be no extra charges for freezing your Demat account.

Globalising Investing Opportunities

Through the Demat account, an international investor can also invest in the Indian market. Moreover, facilities such as Non-Resident External (NRE) and Non-Resident Ordinary (NRO) Demat accounts can help foreign investors invest in the Indian stock market.

Corporate Advantages

If a company decides to offer dividends, refunds, or any other type of bonus, these benefits can be directly available in your Demat account. Furthermore, to assist these benefits, broker service provides direct payment of your bonus to your bank and Demat account.

Loan Against Financial Assets

You can also take a loan with the help of your Demat account. You can get a loan against your holding from banks or other financial firms. In this type of loan, you can keep your financial holdings as collateral against the loan.

Conclusion

As we have covered the Demat account benefits and features, now it’s time to open a Demat account and start investing. To start trading, you need to select a brokerage. A broker like Share India provides all the trading solutions along with competitive prices. The Share India platform provides technology-driven trading solutions. When you choose Share India as your brokerage, you not only gain access to a wide range of trading solutions but also benefit from the convenience of managing your collateral amount within your Demat account for seamless trading and investing experiences. Read more about the Demat account in detail before starting your trading journey.

Frequently Asked Questions (FAQs)