Why do you need a Demat Account to be an investor in stock market?

Why do you need a Demat Account to be an investor in stock market?

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What is demat account? How to open it? is demat account necessary?

You definitely need a demat account to be an investor or stock market trader.

‘Demat’ in Demat accounts stands for Dematerialisation.An investors has to essentially hold Dematerialised shares and securities virtually. In Dematerialisation, shares are directly converted into a digital format and stored in Demat accounts. Demat account is to ensure that the investors don’t have to hold physical shares and can trade and invest in real-time.

Importance of Demat account

  • ·       With a demat account you can invest in bonds, equity shares, government securities, mutual funds, and exchange-traded funds (ETFs).
  • ·        Demat account is either credited or debited each time you buy or sell shares of a company.
  • ·       Limited paperwork
  • ·       All of the Demat accounts in India are maintained by two depositories, namely National Securities Depository Limited (NSDL) and Central       Depository Services Limited (CDSL). 
  • ·       Demat account also provide the nomination facility .
  • ·       You can access demat account easily from your mobile or laptop

How to open Demat account?

There are many platforms to open demat account like your bank and many other apps like Upstox, Groww, Zerodha etc

Documents required to open demat account are:-

  • Proof of identity with a photo. For example, Aadhaar card, PAN card, voter ID card, driving license, etc.
  • Proof of residence - Registered lease agreements, driver's licenses, passports, landline telephone bills, electricity bills, apartment maintenance bills (if applicable), copy insurance, gas bills, etc.
  • Proof of Income - Payslips or taxes (mandatory for the currency and derivatives segment)
  • Proof of bank account - The bank's passbook or account statement (must be no more than three months old).

Demant Account Charges

You need to pay maintenance fees for demat account annually. These charges are nominal and can range from 300-800 rupees. The amount will depend on the Directory Participant and the value of the transactions you make in a year.



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