A DEMAT (short for “Dematerialized”) account is a type of account that allows investors to hold their securities (such as stocks, bonds, and mutual funds) in electronic format, rather than in physical certificate form. There are several reasons why an individual might choose to open DEMAT account.
- Convenience: A DEMAT account allows for easy and convenient buying, selling, and tracking of securities. Transactions can be done online, and investors can access their account information and portfolio at any time. This eliminates the need to physically handle and store certificates, which can be lost or damaged.
- Faster Transactions: Transactions in physical form takes lot of time, as you need to get the certificate, verify the authenticity, and then send to the buyer. With a DEMAT account, transactions can be completed in a matter of minutes, rather than days or weeks. This is particularly beneficial for active traders who need to make quick decisions.
- Staying informed about Forex market times is crucial for traders who want to make informed trading decisions. By find out about market times, they can better comprehend market conditions.
- Reduce Risk of Forgery: Physical share certificates are susceptible to forgery and fraud. With a DEMAT account, securities are held in an electronic format, which reduces the risk of fraud and forgery.
- Automatic Credit of Securities: When shares are bought or sold in physical form, it takes time to transfer the shares from the seller to the buyer. With a DEMAT account, shares are transferred automatically, which eliminates delays and the need for additional paperwork.
- Lower Costs: Opening and maintaining a DEMAT account is less expensive than holding securities in physical form. In addition, when shares are traded in physical form, the buyer must pay for stamp duty and other charges. With a DEMAT account, these charges are eliminated.
- Diversify Portfolio: A DEMAT account allows investors to hold a diverse portfolio of securities, including stocks, bonds, and mutual funds. This allows investors to spread their risk and potentially earn higher returns.
- Easy to pledge as Collateral: DEMAT account enables easy pledging of shares as collateral for availing loans. It eliminates the need for physical shares and the process can be done seamlessly.
- Easy to transfer shares: Transfer of shares in physical form can be a tedious process and may involve a lot of paperwork. With a DEMAT account, shares can be transferred easily and quickly, with minimal paperwork.
- Easy to track your investments: A DEMAT account allows investors to track their investments, view account statements, and access other account information online. This makes it easy to stay on top of your investments and make informed decisions.
- Required for IPO: In case of IPO, shares are allotted in demat form only and not in physical form. It is mandatory to have a Demat account in case of IPO. Moreover, you can buy and sell shares online, track their investments and account information, and access other relevant market data.
In conclusion, opening a DEMAT account with 5paisa offers many benefits for investors, including convenience, faster transactions, reduced risk of forgery, automatic credit of securities, lower costs, and the ability to diversify your portfolio. It’s also mandatory to have a DEMAT account when applying for an IPO. It’s a good idea for any investor to consider opening a DEMAT account for the efficient management of their securities.