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To understand why we need a Demat account, we should first understand what a demat account is and what it does. Just like a bank account protects your money, a demat account is responsible for holding your shares and securities in a consolidated electronic format. A demat account aims at making your trades in the equity market easier and simpler by gathering all your crucial information together in one place. It allows you to conduct transactions of shares and stocks conveniently under a single roof without the hassle of needless paperwork.
The stock market is now open for everyone who desires to generate wealth from investments in the equities market. In years past, it used to be the case that a broker was hired to seek their opinion on which investments to go for. You, as an investor would not have been able to enter the stock market without having a broker. The advent of online trading, however, has made this huge opportunity available for the masses. Online trading gives you the provision to make trades directly in the market without having a broker. However, a demat account is mandatory before you begin your investment journey.
If you are already an investor, you are surely familiar with the term Demat account, even if you do not hold one yourself. There are many investors who feel conflicted on the opinion of holding a demat account, or have a certain trust ingrained in the traditional trading methods. The following points would hopefully help you make up your mind about opening a demat account.
Time saving
Stock market trades are time sensitive and require heavy observation to make the right decisions. In such a time sensitive market, traditional methods of trading, that take a lot of time to complete a single transaction, can cause you to miss out on precious moments that could have been used for making additional purchases and sales of security holdings.
It is hugely beneficial to have a demat account since the trading process is conducted electronically and requires much lesser time than traditional methods. In today’s day and age, a demat account has become a necessity for investors who are entering the stock market.
Easy Storage
Physically held shares and security certificates come with the hassle of storing them securely, as they are prone to theft and damage. A demat account changes the form of the shares and securities, from being a physical document to a virtual one. This makes storing them easy, and these electronic forms of shareholding are easily bought, sold or transferred.
With traditional trading methods, you were required to put in a lot of effort into acquiring the shares of your choice, and it used to be a difficult process since you would not be allowed into the stock market directly. Your only gateway possible was by having a broker. With a demat account, you are free from all these problems.
The Mandate
SEBI has issued a mandate wherein all investors are required to hold a demat account in order to conduct transactions. Therefore, it is essential for all investors, who are interested in making trades online, to hold a demat account. They are required to choose their depository participant and ensure that their demat account is ready before they begin trading in stocks and shares in the equity market.
In case you are interested in making trades in the stock market, and are looking for a demat account, you can open one here https://ipo.kfintech.com/ with KFintech. You have the option to choose a depository participant from a list of 50+ DPs.
If you already have a Demat account, you can refer your family and friends, and earn upto Rs. 400 for every account that is successfuly opened. While they can go with the depository participants of their choice, you also have the option to choose a depository participant for them.
