5 things you must know about the demat account

What is demat account?

Trading in stock markets requires holding a dematerialization or demat account. Through owning a demat account one can be able to trade in shares and securities in a digitalized form. Investing in stocks require the presence of three major things which are a bank account so that you are able to pay and receive funds. A trading account so that you can buy and sell shares online and the most important a demat account which will keep all your security holdings intact and all in one place.

A dematerialization or demat account can be opened with a depository participant (DP) which is authentic and legally registered. There are several registered DPs and choosing amongst them might be a tough and confusing task to perform.

Tips about demat account:

Below listed are five important things which one should know about a demat account:

  1. A dematerialization or demat account holds certain charges and fees which relate to the annual charges of maintenance, conversion fees and fees required for carrying out transactions. The fees or charges differs from one depository participant (DP) to another. Before opening a demat account with any registered DP these charges must be carefully noted and checked.
  2. The next important thing to know is that it is necessary to link your demat account with your bank account. The bank account will thereafter be used to receive the funds when your investments are sold you. Also, you can pay for your investments and transactions in shares through the bank account then. Many registered DPs provide a 3-in-1 account which allows the account holder to have all these three varied kinds of accounts in a single entity making it convenient for the investor to trade in the share market.
  3. Support received from the registered DP is a very crucial thing to be noted. You must choose that registered DP which is assuring you maximum as well as reliable back-end support since one can face problems and issues while transactions and proper support is very essential. An experienced customer support team is helpful in quick and easy resolving of issues. Also you must check the customer feedback and reviews carefully before choosing a DP to open your account with.
  4. Providing nomination details at the time of opening an account is of utmost importance. In case the head of the account expires due to unavoidable situations and reasons all the holdings in the account is then transferred onto the nominee listed in that account.
  5. Majority of the DPs allow opening a demat account online which ensures easy usage of the platform. If you choose a DP which offers a difficult to understand and function platform then it becomes really tough and hectic for you to invest in the stock market, therefore choosing a user-friendly DP platform is recommended. A DP which is reliable offers quick and easy updates without the need to employ brokers. Also, you must look for important features such as bid and ask prices, creating watch lists, profit or loss on individual gains, an overview of your current holdings and history of buy and sell must be available which will enable investing in the stock market easy and also reduces the chance of loss.

Hence, researching well before taking any decision is very important and serves to be beneficial in the long run as well.

News Reporter