Dematerialized shares have changed the way investors invest in the stock market. Investors using a demat account can buy and sell shares with complete ease. Helping users buy and sell the dematerialized shares, the demat account serves as an electronic holding account. The physical certificates have been dematerialized that can be stored in the demat account.
With their extensive benefits, the importance of demat accounts is enumerated through the following points:
- Management of shares in dematerialised format
The demat account enables investors to buy and sell shares in dematerialized format. The physical certificates have been converted into dematerialized shares that investors can trade in through the use of the demat account. Investors can hold their investments without worrying about the physical certificates getting damaged or lost.
- Security
The demat account has enabled traders and investors to hold their securities in an online secure locker which can only be accessed by its owner. With online KYC and authentication, Investors can secure their demat account. The chances of forgery and counterfeiting are almost negligible.
- Hassle-free buying and selling of shares
Investors even receive the flexibility to buy and sell securities with complete ease and efficiency through the use of the demat account. Unlike physical certificates, the demat account helps investors to buy the electronic format of the shares which they can safe-keep. Moreover, the process of buying and selling is hassle-free and more convenient.
- Collateral
An added benefit of using a demat account for buying and selling securities is the ability to use the investments as collateral for procuring loans. Investors can use their demat account and online investments to avail loans from banks and financial institutions that accept online stocks and shares as collateral.
- Easy access
Investors and traders can easily access their demat accounts to manage their investments. One can opt for mutual funds, ETFs, and even shares through the use of the demat account. The process of buying and selling and portfolio management can be done by an investor himself through the use of his smartphone.
Types of Demat Account
There are 4 types of demat accounts which have been enumerated below:
- Regular
The regular demat account is the most common type of demat account which is used by regular traders and investors in India for buying and selling stocks, mutual finance, bonds, and even common securities.
- Repatriable
A repatriable Demat account is used by non-resident Indians who wish to invest in Indian securities. One can trade in Indian securities through the use of the Repatriable Demat account by simple transfer of funds from abroad.
- Non Repatriable
Non Repatriable Demat account is used by NRIs as well helping them to trade in Indian securities. However, NRIs do not receive the option to transfer their investments and funds abroad using the account.
- Basic services
Suitable for investors with limited funds for investment, the basic services demat account offers various benefits. With low maintenance charges and expenses, investors and traders with limited investments can opt for stock market investments in India through basic services demat accounts.
Conclusion
Helping with secure and hassle-free investments, demat accounts have completely revolutionized the Indian stock market. Selection of the best mutual fund app or demat account can help investors make the right decision regarding their investments and thereby manage their portfolio effectively.
