The digitalization of financial instruments has majorly eased the process for individuals to enter the trading market. Earlier, only people with knowledge and resources would invest in shares, stocks, and bonds with the help of other professionals. Now that technology has made the financial market accessible to a wider audience, a Demat account has become significant for every investor.
A Demat account or a Dematerialized account is an electronic storage facility which holds all your investments like shares, bonds, government securities, ETFs, etc. in one place in a digital form, eliminating the need for physical certificates. You can open Demat account with an online DP or Depository Participant and start your online trading. Let’s take a look at how Demat accounts are significant for investors.
Ease of access and storage:
Demat accounts are incredibly easy to set up. If you are 18 or above and have a phone with an internet connection, you can start with your online Demat account quickly. Since it stores all your share and investment certificates online, they are easy to access. This has made buying and selling of shares a breeze. Earlier, you had to go through a tiresome process and multiple formalities to start trading. A lot of paperwork hassle has vanished with the process of Dematerialization.
All investments in one place:
For investors with a diversified portfolio, it was a task to keep track of all the different investments and their certificates, their rankings, etc. With a Demat account, one can consolidate all their investments in one place and easily track their performance. A Demat account can hold equities, IPOs, government bonds, and gold ETFs, all in the digital format and in one place. This makes the Demat account a very convenient tool for investors and saves a lot of their energy and time.
Better security:
Demat account opening has also made the investment process and documents very secure. Physical certificates were susceptible to theft, forgery, damage or loss. They had to be highly cared for and produced in their time of need. Making them digital has saved them from all these threats. People might be suspicious of having their assets stored digitally, but they need not worry since these Demat accounts are stored by NDSL (National Securities Depository Limited) and CDSL (Central Depository Services Limited) and regulated by SEBI (Securities and Exchange Board of India).
Simplifies trading:
The complicated aspects of trading such as profits, dividends, shares, gains, etc., have become a breezy process with Demat accounts. Since it is linked to your bank account directly, your dividends automatically get deposited into your account. Whether there are refunds, rights or buybacks, no tricky paperwork or processes required, it all can be done digitally.
This is why having a Demat account app has become an indispensable requirement for a trader in present times. With the ease of access and storage, enhanced security, consolidation of portfolio and the simplification of trading, a Demat account has multiple benefits and significance for every investor.
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