It was the year of 1996 when the Demat account was introduced in India. Before then, shares and securities are traded and shared physically. But, today with the advancement of internet, one can manage the securities through internet by opening a demat account. If you want to buy and sell stocks, you need to open the best demat account in India. Before opening a demat account, you need to know more about it. If you are a new investor, you should know details of it.
What is Demat Account?
Demat or dematerialization of account means transferring the physical shares into the electronic form. You will be given a demat account number that is required to enable electronic settlements of the trades you are involved in. To state simply, a demat account is kind of bank account. Your bank account holds all your money and keeps the record of all transactions in your passbook. Likewise, the demat account is required to hold the security shares in electronic format and those are debited and credited accordingly. You don’t need to have any balance of shares in your demat account. Having zero balance is not a problem with your demat account.
Advantages of Having Demat Account
Managing lots of papers is really stressful, and if you miss one anyhow, that can bring lots of problems. Having a demat account will eliminate all these problems and you can get all your necessary documents just by one click. Here are the essential benefits of having a demat account-
- It Can’t Be Theft
This is one of the most vital benefits you can have holding a demat account. As those are stored in electronic form, those can’t be stolen or no forgery can happen with those later. Having in physical format has this risk which can be dangerous, but with the demat account, you don’t need to be worried.
- You Don’t Need to Pay Stamp Duty
You just need to pay security transaction taxes, but there is no stamp duty that you need to pay for the physical shares that were common earlier. Initially, people have to visit the stock exchange to buy transfer stamps and that was really hazardous. You don’t need to do anything like that today.
- Transferring Share Is Simple
Previously, shares are sent to the registrar or the company so that those can be transferred to an individual’s name. This was a time-consuming process as it would take months and to the worst, certificates could be lost forever. Today, with the demat account; shares can be transferred immediately without any delay.
- You Can Also Nominate Now
If any individual wants to open a demat account, you can nominate him/her now. Earlier, with physical certificates, this was not possible unless you had a joint account. But, being a demat account holder, you can do this now.
These are the benefits of having a demat account. Open one immediately once you decide to invest in the stock exchange. You can open more than one account and manage them all efficiently.