A Demat account or a dematerialisation account is similar to a bank account. While you hold cash in your bank account, the former has securities in an electronic format. The securities can be shares, bonds, mutual funds, or Exchange-Traded Funds (ETFs).
Despite the similarity, a Demat account is mandatory if you want to invest in equities. India has two depositories; Central Securities Depository Limited (CDSL) and National Securities Depository Limited (NSDL). A Demat account is opened with a DP (Depository Participant) that connects you with the two depositories. Apart from being an electronic mode of keeping securities, a Demat account has other benefits.
1. Convenience and Flexibility
Demat Account provides flexibility to invest in various financial instruments. You have the freedom to invest in equities, fixed deposits, mutual funds, insurance, government and corporate bonds, and Initial Public Offerings (IPOs) at your convenience. You can also trade in derivatives through a Demat account with Klevertrade. Hence, making the convenience of investment in multiple instruments a click away on a single platform.
2. Stay Updated
Once you set foot in the stock market, keep a close eye on important company news and announcements. An account with a reliable DP, like Klevertrade, will ensure you are updated and timely share market news in coordination with your investments. Periodic messages related to dividend declaration, results, mergers, buybacks and other similar information will all be shared by the DP. Furthermore, you can access analyst reports based on financial projections, company performance, and historical data to assist you in making informed investment decisions.
- Avail Beneficial Information
A Demat account allows you access to beneficial information. It lets you check live share market updates and further analyse your investments. The DP may also provide buy, sell, or hold recommendations to help you maximise your benefits. You can also use market capitalisation charts to make investment decisions.
4. Set Alerts
Time and timing are of prime importance in the stock market. Knowing the right time to enter, hold, and exit the stock is a crucial decision to maximise profits on your investment. A Demat account will allow access to timely information without being glued to a screen via alerts. You can further enter automatic buy and sell instructions at a pre-specified price limit to keep yourself away from constantly checking the price.
- Track Portfolio
Tracking the investment portfolio is an essential aspect of financial planning. A dematerialisation account lets you easily track the performance of different investment products across your portfolio. Hence, making room for necessary modifications to minimise risk and maximise returns.
While a Demat account is mandatory today, if you are looking forward to investing in the share market, choosing a DP that provides the maximum benefits of holding an account with them is imperative.
In other words A Demat account or a dematerialisation account is similar to a bank account. While you hold cash in your bank account, the former has securities in an electronic format. The securities can be shares, bonds, mutual funds, or Exchange-Traded Funds (ETFs).