The Paperless Path to Profits: Maximising Returns with a Demat Account

Did you know that share market trading occurred physically before 1996? Digital trading started when SEBI introduced the concept of the Demat trading account. With the launch of NEAT (National Exchange for Automated Trading) in 1996, traders began placing their orders electronically. The investment landscape has completely changed with the launch of several trading platforms. Traders need to have an account to take advantage of digital trading. Read on to understand how a Demat account can help maximise returns.

Understanding Demat account and its benefits

Are you familiar with the working of a dematerialisation (Demat) account? Understanding the usefulness of a Demat account before stepping into the world of digital trading is essential. A Demat account opens doors to paperless trading in India. With a Demat trading account, you can hold securities in digital form for as long as you like. Dematerialisation is the process of digitising financial securities like stocks, commodities and currencies. You don’t have to carry physical certificates of securities by opening a Demat account in India. It is the biggest benefit of opening a Demat account with a trusted Depository Participant in India.

A Demat account allows traders to invest in IPOs (Initial Public Offerings) in India. Similarly, many Demat accounts allow traders to invest in mutual funds and earn returns. However, you cannot access all financial securities with a Demat account. In order to increase the investment range, traders require a trading account linked to the respective account. It is crucial to note that holding securities in digital form is the primary role of these types of accounts. Hence, traders might not buy or sell securities listed on public exchanges with only a Demat account. For the same rationale, traders search for a stockbroker that can help them with opening both Demat and trading accounts.

Here is the list of benefits of having a Demat account (linked to a trading account) in India:

The safety of securities is the biggest benefit of having a Demat account. Unfortunately, you cannot ensure the safety of securities in physical form, as they might get stolen or lost.
A Demat account is a one-stop solution for investors in India. In conjunction with a trading account, it can offer access to a wide range of financial products.
Digitised securities are easy to maintain as compared to physical securities. You do not have to carry physical certificates by opening a Demat account in India.
A Demat account will allow you to keep track of your securities and take necessary actions. You can also indulge in investment research and portfolio management with a Demat account in India.

A step-by-step guide to opening a Demat account in India

You must choose a reliable stockbroker. They will help you open both Demat and trading accounts in conjunction.
Many stockbrokers allow you to open a Demat account online in simple steps. First, you will have to provide some details for the Demat account KYC check online. The stockbroker will also ask you to submit a few documents.
After submitting all the details, you might be asked to pay Demat account opening charges. However, a few stockbrokers also allow traders to open Demat accounts for free in India.
Wait for the stockbroker to verify your details and activate the Demat account. Some stockbrokers might ask for in-person verification before activating the Demat account.
Once the respective stockbroker activates the account, you can start trading in the share market. Do not forget to open a trading account in association with the Demat account to enjoy all benefits. You might be asked to pay different account charges at regular intervals.

Understanding additional charges related to a Demat account

After the initiation, another important step is the Demat account KYC check. It is now time to understand the charges associated with a demat account which are as follows:

Stockbrokers apply transaction or brokerage charges for trading activities. For example, you might have to pay a brokerage fee for selling securities held in your account.
AMC (Annual Maintenance Charges) is applied by stockbrokers on Demat accounts. It is a one-time fee paid to the stockbroker for keeping the account active.
Custodian charges are levied by the stockbroker for keeping securities safe in the Demat account.
Dematerialisation charges might be levied for digitising financial securities.

In a nutshell

The digital trading facility has totally transformed how people in India invest. With Demat trading accounts, you can indulge in live trading, holding, intraday trading, and many other activities. Don’t forget to choose a reliable stockbroker with lower brokerage charges in India.