by Team Sharekhan
We care that your succeed
Leaving no stone unturned in creating a one-stop shop for the latest from the world of Trading and Investments in our effort to Make the Markets work for YOU!
Why Every Investor Needs a Demat Account - Key Benefits and Future Trends
- Aug 8, 2024
The Indian stock market has been scaling new heights, with the Nifty 50 index reaching 24k levels and the Sensex almost reaching 80k as of July 10, 2024. This positive market scenario is attracting more investors to explore profit-generating opportunities. One essential tool that you require while participating in stock markets is a Demat account.
Let’s explore why having a Demat account is crucial and what benefits it offers.
Why You Need a Demat Account
A Demat or Dematerialised account is essential for holding shares and securities electronically in India. If you have a Demat account, you can easily buy, sell, and manage your investments online. In India, SEBI (Securities and Exchange Board of India) mandates that all stock market trades must be conducted in a Demat form. A Demat account allows you to receive dividends, interest, and refunds directly into your bank account, simplifying the entire investment process.
What are the Benefits of Having a Demat Account
Here are some of the benefits of having a Demat account:
Benefit | Description |
Fast Share Transfer | Shares are transferred digitally right after trade approval, making transactions quick and efficient. |
Easy Tracking | You can easily keep a track of your trading activities and account information online anytime by simply logging into your account. |
All-time Access | Allows you to trade on the go using a smartphone or computer. This provides flexibility and convenience. |
Auto Credit of New Shares | You can get automatic credit of new shares from events like stock bonuses, rights issues, and mergers to your account. This ensures that you receive all entitlements seamlessly. |
Efficient Settlement | Facilitates a T+1 settlement cycle. This ensures timely payment to sellers and crediting purchased securities to buyer’s account quickly and efficiently. |
Add Beneficiaries | Allows the addition of beneficiaries to your account for smoother inheritance and transfer processes, making it easier to manage succession planning. |
Things to Remember While Opening a Demat Account
When opening a Demat account, select a reputable depository participant (DP), such as a well-established bank or trusted broking company. Familiarise yourself with account opening charges, annual maintenance fees, and transaction costs, comparing these among different providers. Opt for a DP that offers necessary tools like online access, customer support, and research reports.
Future Trends in Demat Accounts
New technologies like artificial intelligence (AI) and machine learning (ML) are slowly making their way into the financial market landscape. Experts are anticipating that services like Demat account will likely offer more personalisation with the integration of AI-driven chatbots that provide 24/7 assistance. Whether it is your investment queries or need to know about the latest market trends, technologies like machine learning may have the potential to transform your investment experience altogether.
The Serious Truth You Should Know About Demat Accounts
When you own a Demat account, it comes with associated maintenance and transaction charges. Depository Participants (DPs) impose an Annual Maintenance Charge (AMC) to cover the costs related to technology, infrastructure, and manpower required to maintain your account. Even if you haven't conducted any trades throughout the year, you may be required to pay this charge. This fee differs across brokers / online platforms.
Additionally, every time you buy or sell shares, you will incur transaction fees. These fees vary based on the value of the transaction. The transaction fees are necessary to cover the execution costs of transaction. Before you open a Demat account, make sure to compare these charges across broking platforms and pick one that aligns with your investment pattern and budge.
Conclusion
If you are thinking of getting a Demat account for yourself, make sure to learn more about Demat accounts and also the basics of stock markets. To access some of the best resources on stock markets, you can check out Sharekhan Knowledge Center.