Before we know why the Demat account is necessary lets know what is demat account? Demat or Dematerialized Account is an account to hold shares and securities in an electronic form to manage securities quickly and hassle-free. It’s mandatory for investors to have a Demat account to invest in the stock market. Now lets have some in depth knowledge about the necessity of a Demat account.
Demat Account is similar to the bank account which holds securities whereas we save money in banks which are managed by banks and regularly updated on passbooks. Likely when investors trade on shares, it will be reflected in Demat Account respectively. It can be used to hold a variety of investments like mutual funds, bonds, government securities, equity shares, and exchange traded funds. You can open a Demat Account and maintain a zero balance in your account.
Demat account provides some benefits like easy to manage securities, quick and efficient process of transactions, online selling of securities, securities to access a variety of bank loans, and many more. To open demat account online India a broker is needed with Proof of income , Proof of identity and Address proof. After this we need to select an appropriate Depository Participant (DP) to open a Demat Account.
It is important to select an appropriate broker to open a demat account as after some document submission and verification by the Broker you need to pay annual fees. We need to take in consideration the trading brokerage charges in India and the charges by the broker.
We must select from the best stock market broker in India to be safe and secure with affordable brokerage and having a long term secure trading.