Investment in stocks and shares can be a thrilling adventure. Before stepping into this interesting game, some basic things have to be known first, like how to open demat account. This is something crucial for someone who wants to trade in the stock market. Let’s break it down for you: what exactly is a demat account and why do you need it on your investment journey?
What Is a Demat Account?
A Demat account is a short form for the term “dematerialized account.” It keeps its shares and securities in electronic form within an account. Thus, instead of paper certificates, your investments are kept online.
One can hold securities such as shares, bonds, mutual funds, and even ETF under this demat account. It will make it effortless to manage investment, and above all, does it?
Why Do You Need a Demat Account?
You cannot invest in the stock market without a demat account. Here’s why:
- Facile Trading: Under a demat account, shares can be traded as facilely as possible. You have no reason to depend on a physical certificate; save time and make instant trades.
- Security: Since the shares exist in digital forms, the likely chance of loss or damage of certificates is next to impossible. One need not fear losing his/her investment.
- Convenience: With your Demat account, you can access it from anywhere. In other words, you can check your investment, do a trade, and follow up on what is happening in your portfolio anytime you want.
- Cost-effective: Several brokers offer demat account maintenance fees that are usually done at affordable charges. This comes in handy for one who wants to start investing.
How to Open a Demat Account?
- Select a DP: You will be asked to choose a depository participant. He’d be a bank or other financial institution offering depository service through demat. Read about their charges and services before arriving at one suited to your needs.
- Apply for Demat Account Form: After choosing the DP, you will have to fill out the application form. You would be asked to furnish a few personal information and ID details as well.
- Submit Documents: This will require the attached application form. A set of documents will be required by attaching which will have in it a proof of identity, which is a passport or driver’s license for instance, proof of address, utility bill, and PAN card/ Permanent Account Number.
- Verification Process: Upon the receipt of your application at the DP, he would have to verify all the documents submitted. All of this takes a few days.
Once you successfully apply, you receive your demat number along with your login credentials.
Conclusion
So, essentially, what a demat account does for you is keep your investment both safe and ready for you to access. Now let’s get down to what is a demat account. The process isn’t at all difficult, as shown above in the instructions step by step. Now, armed with that demat account of yours, get set to enter the exciting world of investments.
It is not a very tough job, and finding a site for investment management leads to 5paisa. Its user-friendly features are surely worth a try.
