Benefits of Opening a Demat Account

Posted by Atish Nayar on December 10th, 2019

Demat is the acronym for Dematerialisation. The NSDL (National Securities Depository Ltd.) defines Dematerialization as the process by which the investors can get physical certificates and securities converted into electronic balances”. A Demat account allows you to hold the shared in digital form and it is an excellent alternative for holding and trading the physical shares. Apart from shares, the Demat account also allows you to hold mutual funds, gold bonds, and ETFs.

Benefits of opening a Demat Account for trading:

Reduces paperwork

In the purview of the growing awareness about reducing the use of papers and going digital, the Demant account allows you to hold all your investments and related documents in digital form. Thus, it not only reduces the paperwork but also saves you from the cumbersome documentation and filing process. Also, it speeds up the transaction process and increases efficiency.   

Safe and secure

Since the Demant account is completely digitalised, it reduces the risks associated with handling the physical securities and other investment-related documents and saves you from the hassles of misplacement or damages. The Demat account will hold your documents safe and secured in a single place. Another advantage is that it eliminates the dangers of securities and wrong deliveries.    

Reduces cost

Trading in the physical entities incur high transactional costs; you would have to bear expenses like stamp duty and securities handling charges. But, with a Demant account you need not incur any such charges, and thus makes trading more cost-efficient.

Instant access

This is one of the most significant benefits of opening a Demat account for trading. With a Demat account you can easily invest, carry out trades and review your portfolio at any time you want through your mobile phone, tablet or any other handheld device. Having the access to your account through multiple platforms allows you to carry out the trade even on the go; all you need is a good internet connection.

Facilitates easy transferring of shares

As an investor, if you may have to transfer your share holdings. With a Demat account you can keep all your shares in digital format and transfer the securities instantly. You just have to provide the necessary instructions to the depositary participant and the transfer will be carried out automatically.

Easy and rematerialization and dematerialization

With an online Demant account, you can quickly convert your securities and shareholdings in physical or electronic format. You must give the necessary instructions to the depository participants for dematerialization or rematerialization. Dematerialization is the process to convert the physical certificates in to electronic form and rematerialization is the process to convert securities in physical form.

Monitor/review your portfolio with a single account

Demat account gives you the advantage of managing all the transactions from a single account. This means it eliminates the hassle of opening different accounts for a negotiable certificate of deposits (NCDs), tax-free bonds, etc. This also makes it easy to track your portfolio performance.

Easy transfer

Earlier the process of transferring of shares involved sending the shares to the company or registrar in order to get them transferred. This process was tedious and time-consuming. Demat account simplifies the process of transferring shares and makes it quicker.