A demat account helps investors hold shares, debentures, bonds, exchange-traded funds, and other securities in an electronic format. The term ‘demat’ stands for ‘dematerialisation’ – a process through which securities are converted from their physical form into an electronic form.
Before demat accounts were introduced in India, people used to have paper certificates for their stock market investments, which was a hassle because they had to keep on looking at papers while trading.
Compared to that, a demat account is more convenient because it allows an investor to access all his investments on his laptop using an internet connection. If you are thinking of opening a trading account, read this blog because we will discuss the top 10 reasons to open demat trading accounts.
Top reasons to open demat trading accounts
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Smooth transactions in securities
A demat account helps investors buy and sell securities online without any hassles. All they need is a computer and an internet connection to do it.
They do not have to visit the stock market; they do not have to deal with any paperwork. Besides, even the demat account opening procedure is fairly smooth.
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Securities are digitally stored
A demat account enables you to digitally store all your securities. You do not have to maintain paper files or folders like in older days.
Everything you own is stored digitally and is available to you all the time in an electronic format.
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No chance of theft, forgery, or loss of securities
Often share certificates used to get stolen in earlier days because they were in the paper format. There was also a risk of forgery and loss of shares. However, if you have a demat account, you do not face these risks because securities are in an electronic form and are digitally stored.
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Cost-effective
Demat accounts help investors hold securities in an electronic form, which reduces several costs related to the physical transfer of such investments, such as stamp duty, notary, and registration.
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Seamless tracking of investments
You can track your investments from anywhere with a demat account. However, earlier, when people used to have paper certificates, they had to call up their broker to know a stock’s price to track their portfolio.
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24 by 7 access
With an open demat account, you have 24 by 7 or all-time access to all your investments in securities. Earlier, you had paper certificates, but that did not mean that you had access because you had to call your broker to trade.
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Easily add beneficiaries
You can add a beneficiary to your demat account online. Before the advent of demat accounts, you had to do all the paperwork to add beneficiaries.
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Get rights issue, bonus stocks, and split shares easily credited
With a demat account, you can automatically get rights issue, bonus stocks, and split shares credited to your account, as all these things happen electronically. You do not have to do any paperwork; nor do you have to chase any broker
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Builds investors’ confidence
Demat accounts help build the confidence of investors. With demat accounts, investors are rest assured that there is a record of all their transactions.
Therefore, they need not worry. Earlier, they were constantly worried about keeping all the papers to ensure that no stock certificate was lost. Demat accounts have completely eliminated such hassles from trading in securities.
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Increases the participation of investors
Before the advent of demat accounts, several people, who were otherwise keen on investing would not invest because they found paperwork hard.
However, by removing paperwork almost entirely, demat accounts have brought many new investors to the financial markets. Besides, as trading with demat accounts is hassle-free, it motivates people to trade more and hence increases the volume in the securities market.
Conclusion
There are so many benefits of having a demat account that it makes sense to have one. So, if you do not have such an account and you want to trade, get it opened today!
