Why Should You Open Demat Account ?

We live in uncertain financial times and it is very important to have a proper financial back up plan in place. With our income alone, we cannot achieve our financial goals. Investments are the need of the hour. You can invest in any of the financial assets available in the stock market. It can be equity, mutual funds, bonds, etc. If you want to invest in share market, you have to be aware of what is demat account and why is it necessary. Before the process of dematerialization, investors had a difficult time in case of maintaining and safeguarding physical shares as these were prone to physical damage, theft and manipulation. All these issues have been overcome by electronic storage of shares. As per a recent SEBI circular, one cannot transfer physical shares after Apr 1st 2019.

In India, the concept of dematerialization by which physical shares can be converted to electronic format was introduced in the year 1996. Demat account is one that holds shares in electronic format. All your demat shares are stored in NSDL or CDSL, the depositories.  You can access these depositories through the depository participant or brokers. You have to open demat account in order to trade or invest in the share market. Annual Maintenance Charges have to be paid to have a demat account. You need not be an expert to trade in the stock market. With practice, you can gradually become an expert trader. Dematerialization has improved the efficiency in case of trading and also quickened the settlement process. The other benefit of having a demat account is that you can receive all corporate benefits such as rights issue, bonus shares, dividend, etc. into your demat account. You can open demat account online with stock brokers like Angel Broking, Karvy, Zerodha, Sharekhan, etc. after comparing the fees and services provided by them. Just fill in the details like name, date of birth, bank details, etc. and then AADHAAR based authentication will happen. After this, In-Person Verification will occur simply to validate the details provided by you. Your E-signature will be generated after which your account will be opened. It will hardly take 10 to 15 minutes of your time. Previously, account opening was a cumbersome and time taking process but these days you can open demat account in a hassle free manner.

Earlier, if you had to change your residential address or any other details, you had to update this information with each and every company wherein you held shares. But with demat account, once you update the changes with your depository participant, it gets automatically updated with all the companies. Open demat account today!

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