What is Demat Account and Its Advantages?

Intro to demat

Demat is in short for Dematerialization and is a process where physical instruments that are used for finance purpose like share certificates, investments associated with bonds and mutual funds are transformed in electronic instrument form.

The investor eager to dematerialize his shares will require possessing a demat Account SBI to carry on online trading and transactions. Once this online account is opened, the trader is able to receive electronic shares in his account, giving back his physical shares.

This account is quite similar to that of the bank account. It displays very clearly all purchased shares and securities, along the ones that are sold. It also includes the total investments which are left back on the given statement’s last day.

Know where demat is to be opened

Since this account is government regulated, it is necessary to open it only with authorized banks and registered trading companies. These days, it is quite easy to open up this account anywhere in the country. The interested trader, be it a beginner or an experienced one in this market can get an account in his name without any hassle. He is required to approach a good, trustworthy, registered and experienced broker to start the demat shares account, combined with necessary brokerage account. Whenever any shares are purchased or sold, the broker on behalf of the client deposits or moves out the securities in the account. It is important to link the brokerage account with the bank account to ensure that all payment related tasks are completed while selling or purchasing shares.

Benefits of having such accounts

There are several benefits to be enjoyed by deriving this account. Some of them are mentioned below:

• The functioning of investments as well as its hold is quite easy using this account. This is because, the manual lengthy paperwork that was required before has been reduced now significantly.
• One major issue noticed with physical certificates and securities is that there is always the fear of losing or misplacing them somewhere. But by having the shares materialized, this particular problem can be avoided completely. Also, the investment certificates will never get misplaced or lost at any point of time. At the same time, no one also will be able to steal them. Hence, it is a safe method to trade shares and securities without any botheration involved.
• It becomes much easier to transfer securities.
• There are plenty of expenses involved when trying to purchase physical securities. This cost is generally associated with the relevant papers or perhaps the products that are being used. Even it could be anything else. However, with electronic shares, there is involved very less cost.
• The other major advantage to derive by choosing online trading is getting bonus shares from time to time. This does help the trader to get additional profits and have an extra edge over those who are still committed to the manual trading process.

The above benefits should be clear enough for all new and existing traders to switch over to online trading immediately.