Objectives and Importance of Opening Demat Account

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So, do you intend to trade or invest in the stock market? Or maybe you just want to brush up on your knowledge of stocks and investing? Are you trying to find out more about Demat accounts in India?

Amid the coronavirus pandemic, investing has gained in popularity as it shows that we cannot rely on a single source of income. To invest, you’ll need a Demat account. However, before you can start investing through a Demat account, you’ll need to understand the Aims and Objectives of opening a Demat Account.

Aims and Objectives of Demat Account

There are numerous reasons why opening a Demat account has been heavily promoted since its inception. The following are the key Demat Account Goals and Objectives:

  • Reduces The Risks

No risk of misplacement, loss, theft, or fraud with Demat accounts because investors can keep their shares in digital form rather than hard copy, as there is with paper stocks. As a result, a Demat account’s goal is to make stock management easier than it was previously.

  • Simplify The Process

A Demat account also tries to streamline processes. Stock transfers are now much faster than before, taking only a few hours rather than weeks. Furthermore, the procedure of changing addresses has become more seamless and time-consuming since the advent of Demat accounts.

  • Convenient

Comfort is another area that Demat accounts strive to improve. It has effectively dealt with time-consuming procedures like buying and pasting stock market stamps, as well as restrictions on selling shares in large amounts. As a result, the procedure is simple and quick.

  • Reduce The Transfer Time

Stock transactions also require substantially less documentation due to the digital system, making them a cost-effective procedure.

Why Demat Account Is Opened?

Let’s look at why it’s important to open a Demat account:

From the standpoint of an investor, you can make use of the following advantages:

  • Safer Than A Physical Certificate:

It is safer than owning actual certificates since it eliminates the chance of loss, fraud, or a bad trade.

  • You can sell even one share:

Before the advent of the Demat Account, a shareholder couldn’t sell even one share from his or her holdings.

  • Flexible Workplace:

It allows traders and investors to work from anywhere using a variety of terminals.

  • You Can Keep All Types Of Securities:

Mutual funds, debt instruments, equity, ETFs, and other financial products can be held in the account.

  • Reduced Cost:

It eliminates expenditures associated with physical certificates, such as excessive stamp duty and other charges. As a result, the entire transaction cost is reduced. Additionally, flat-fee brokerage models help save money. Trading costs can be simply calculated using online brokerage calculators.

Conclusion

Trading in the securities market requires a Demat account. The market and various depository participants have responded over time, making the process of opening and maintaining a Demat account extremely efficient and straightforward. While the basic goal of a Demat account continues to enable investors/holders of the account to hold and transfer securities, it now also provides an efficient and optimized trading experience. When one thinks how far it has gone from the days of forgery, fraud, inability to purchase securities in odd lots, and the risk of losing share certificates, the necessity of a Demat account becomes even more apparent.