Almost 99% of the Indian households hold a bank account. Banks offer important financial services to the population across the country. You must know how a bank account works.
You hold your cash in a bank account. You may deposit and withdraw funds from your bank account as required.
Just like a bank account, a demat account is used to store your investments in a digitized form. Such accounts provide access to stocks, bonds, exchange-traded funds, initial public offerings, and much more. Here are six reasons why you must consider opening this type of an account.
- Stock trading
Stock trading is not allowed in the paper format. Since 2014, the Securities and Exchange Board of India (SEBI) has made it compulsory to sell and buy equities only in the digitized format. When you open a demat account online, you are able to trade in stocks because it is now mandatory.
- Invest in different securities
This type of an account provides you access to a large number of financial instruments. With a demat account, you may invest in mutual funds, gold-related securities, government bonds, fixed deposits, insurance, and derivatives (futures and options).
- Review your investment portfolio
Investing is not a one-time process and you must regularly review the performance of your holdings. When you hold this type of an account, all your investments are held in a single location. This makes it easier for you to review and monitor the performance of your investments. Therefore, you are able to make the necessary modifications to ensure maximum benefits and higher returns on your investments.
- Procure technical analysis
In addition to access to live market data, you are able to conduct a detailed analysis of your investments. You may be able to view charts and other technical analysis based on the different market conditions. Some high-advanced accounts provide investment decisions to hold, buy, or sell your holdings.
- Stay updated with the market news
One major issue with investments is that you may be unable to keep track of important market events, which affect your holdings. These types of accounts allow you to track important events and news related to your holdings. Based on your holdings, you receive news about vital events such as annual results, buyback, dividends, mergers, and much more. Additionally, you may have access to analyst reports that allow you to identify beneficial investment opportunities.
- Receive alerts
You may not have the time to track the movements of your holdings regularly. These accounts allow you to set alerts, which ensure you do not miss on important things. Additionally, you may set alerts for trigger prices at which your holdings are automatically sold or purchased.
The aforementioned should have answered your question—what is a demat account and its importance. Opening an account is very simple and a quick procedure. You may submit a duly filled application form to a Depository Participant (DP). The DP verifies the information and once the process is successful, you will receive the account number. Alternatively, you may open a demat account online to further reduce the processing time.
If you want to trade online through a trading account, you will require this type of an account. A demat, trading, and linked bank accounts are required to invest online without any hassle in a quick and simple manner. Get an account today and start your investment journey.