When you want to trade in the stock market the first thing that you need is a demat account. It is an account similar to your bank account. In your bank account you keep money and in your demat account you will keep shares of companies you want to trade in. You can also apply in IPOs using demat account.
Gone are the days when you had to go through a lot of paperwork before opening your demat account. Now things are digital. You can opt for online demat account opening. This is an easy and hassle-free options to open your first demat account.
Can’t I hold shares physically?
There was a time when people used to hold shares physically. They were provided with a share certificate for the same. However, keeping shares physically requires a lot of paperwork. Moreover, you have to be very careful because receiving fake shares were the norm. This is why things shifted to electronic form. All your shares are stored in your demat account electronically. You don’t have to worry about fake shares. All your investments are protected at one place.
What kind of investments can be held in demat account?
Equity shares are not the only thing that you can hold in your demat account. You can also hold:
- Exchange traded funds
- Mutual funds
- Government securities
Advantages of demat account
1. Transfer your shares
Transferring shares have become very easy with demat account. You need to fill the Delivery Instruction Slip (DIS) and provide all the details of the account you want to transfer your shares to. Moreover, all this process is digital which drastically reduces the hassle. Transferring shares was never this easy.
2. Loan facility
Did you know that your demat account can also help you in getting loan from bank? Yes, this is true. You can pledge the shares in your demat account as collateral for a loan. This way you can raise good money from bank.
3. Dematerialisation rematerialisation
Some people want electronic shares and some want physical shares. You would be surprised to know that share market has option for both the group. When you convert your physical shares to electronic form it is called dematerialisation and when you convert electronic shares to physical form it is called rematerialisation. You can keep shares in any form as per your requirements.
4. Easy accessibility
Because demat accounts have become digital it can be easily accessed from anywhere at any time. Moreover, most of the brokers have their apps, so whether you are travelling or having your lunch in a restaurant you can check how your shares are performing in the market.
5. Corporate benefits
Companies provide many benefits to their shareholders like dividends, share split, bonus shares, etc. All these benefits can be availed if you have a demat account.
To sum up
Before investing in the stock market, you have to have a demat account. However, there are many brokers in the market. You should choose only the best broker: 5paisa.