Amazing Features & Benefits Of Having A Demat Account
Opening a demat account is mandatory to participate in online trading. It works like a bank account but instead of holding your deposits and money, it holds bonds, mutual funds, ETFs, shares, and other financial securities. A demat account negates the need for physical share certificates by holding the securities in digital format. It enables you to buy, sell, and transfer shares online. These are some essential features of a demat account that make online trading convenient:
Dematerialisation of shares
If you have some shares in physical form, you can get them converted to electronic form by using a demat A/C. The dematerialised shares can be reconverted back to physical shares if necessary. This process is called rematerialisation. A nominal fee is charged for both of these procedures.
Quick access to investments
You can track all your stock market investments through a demat account. You simply need to login to your demat account and access your holdings. It is also possible to access these details via a mobile app or web application these days. To check each and every transaction carefully, you can download a detailed account statement from your demat account.
You can book an IPO (Initial Public Offering) through your demat account. The demat account will also provide you with updates regarding the upcoming IPOs and other corporate events. For example, if a company decides to offer a buyback to its shareholders, the update regarding the same will reflect in your demat account. If you hold the shares of that particular company, you can apply for the buyback through your demat account.
Freezing a demat account
If you don’t intend to use your demat account for a specific period, you can freeze it. Freezing a demat account will block the unnecessary debits and credits. It is possible to keep the credits open by only blocking the debits.
Benefits of a demat account
These are some key benefits of having a demat account:
The demat account holds the shares electronically and facilitates faster and seamless online trading. You don’t have to maintain the records of your transactions as they get automatically updated in your demat account. As a result, it saves both time and effort and allows you to focus on the core aspects of trading.
Multiple earning opportunities
Through a demat account, you can trade in stocks, futures and options, currencies, commodities, and other asset classes. It presents multiple earning opportunities that you can use as you gain more knowledge and experience in stock market trading.
The corporate benefits like bonus shares, splits, and dividends are directly credited to your demat account. Many brokers also provide the information on upcoming dividends, bonus, buyback, and splits to their investors through the demat account.
As the transactions are done online, there is no need to spend on stamp duty and documentation. The handling demat charges and other expenses associated with physical share certificates have also been eliminated after the introduction of the demat accounts in India.
The online trading facilitated by a demat account and trading account is much more secure and convenient. The physical share certificates were susceptible to damages. The instances of forgery, theft, and loss of physical shares were also common. These risks have been reduced to a great extent after the introduction of demat accounts.
Loan against securities
You can apply for a loan against your securities. This facility is provided by most banks and finance firms these days. While your securities will be pledged, you will continue receiving bonuses, dividends, and other corporate benefits through your demat account.