To invest in the stock market, you need a demat account as it stores all your shares and securities safely. A demat account is also referred to as a dematerialised account as it stores your holdings in electronic format. You need to open demat account for holding the shares, bonds, mutual funds, and other securities that you buy. Here are some key features and benefits of having a demat account:
Eliminates the need of paperwork
If you have a demat account, you don’t have to go through any paperwork while purchasing or selling bonds, shares, and other securities. You can hold the shares in your demat account as long as you want if you prefer delivery trading.
If you are interested in intraday trading, you will have to sell the shares before 3.30 pm. A demat account enables you to place the buy orders in real time and they get executed almost instantly if you have sufficient funds in your account. You may also sell the shares instantly if you own a demat account.
The price of every stock can be monitored through a demat account. You may add all your favourite stocks in the watchlist to view their movement in real time. This helps you to take a buy or sell position according to your requirements. Therefore, a demat account enables you to book a profit from the real-time movement of the stocks.
Transferring shares through a demat account
Transferring shares between two demat accounts is possible. You may also transfer other securities like bonds and mutual funds from one demat account to another through a DIS (Delivery Instruction Slip). The details regarding the transfer of shares need to be properly filled in the DIS for completing the transfer process smoothly.
Freeze a demat account
If you will not be using your demat account for a particular period, you may freeze it for that specific period. Freezing a demat account will not affect the shares that are held in them. However, you may not transfer any amount to that demat account till it is kept freezed.
If you have some physical share certificates or securities, you may convert them into dematerialised i.e. digital form by using your demat account. Similarly, dematerialised share certificates can be converted into physical copies whenever you require them.
A demat account can be accessed from any part of the world. Nowadays, even mobile and web applications are available that allow you to access the demat account instantly. By accessing the demat account, you can manage your investments and track your securities without any issues.
Splits, dividends, and other benefits
Each company decides to give a dividend to its shareholders after every quarter, year, or six months. Some companies also split the stocks in a 2:1 or 3:1 ratio. The notification of splits, dividends and other corporate benefits is sent to you via email. However, if you miss out on such emails, there is no reason to worry as they will be reflected in your demat account as well.
A demat account also provides information about the latest IPOs that will be launched by particular companies in the near future. You may also decide to buy these IPOs through a demat account.
Several other features and benefits are associated with a demat account. However, you must check the demat account charges, AMC, brokerage, and other factors before opening a demat account. It is recommended that you go through the features and benefits of various trading platforms individually to determine the one that is the best for your trading requirements.