Why do I need a demat account for stock trading? MintGenie explains
demat or dematerialised account. A Demat account serves as a secure storage facility for all your shares and securities. Unlike the traditional method of holding physical share certificates, which posed risks such as theft, demat accounts store securities electronically, mitigating such concerns.
In India, two primary depositories facilitate the opening of demat accounts: the National Securities Depository Limited (NSDL) and the Central Depository Services Limited (CDSL). These depositories play a crucial role in maintaining and managing the electronic records of securities held in demat accounts. When you want to trade in shares or hold them on a delivery basis, you need to have a demat account for online stock trading.
But why should you open a demat account for trading? Let's take a look at its key benefits. No Document Loss: Prior to the advent of demat accounts, shares were vulnerable to tampering, theft, and forgery due to their physical paper form. The process of transferring shares involved cumbersome paperwork, prone to errors and delays.
Demat accounts provide a secure electronic storage solution, eliminating these risks and simplifying transfer processes. Cost-Effective: Traditional physical trading incurred additional costs such as handling fees and stamp duties, often unpredictable and burdensome. Demat accounts streamline expenses, with transparent brokerage charges being the primary cost.
Opting for discount brokers further enhances cost-effectiveness, making demat accounts an attractive choice for traders seeking savings. Time-Saving: Demat accounts enable swift buying and selling of shares, thereby enhancing share liquidity. Transfer processes have been significantly streamlined, resulting in
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