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Everyone knows that saving account, current account, fixed deposit account and demat account.But most people do not know much about it, such as the differences and benefits between a demat account and a saving account.
Demat accounts are mainly used for investors.every new investor entering the share market needs to have a demat account.
Read this article to know how to get started in share market – Share Market No.1 Opportunity To Build Money – Part 1
In this article we will know more Benefits of demat account to investors.
History of Demat account
Before looking at the benefits of a demat account, let’s take a brief look at its history.So that you understand why need a demat account.
The first demat account was introduced in India in 1996.Prior to that, demat account work was done offline.
In the beginning, shares were kept in physical form.At that time regular traders were facing a lot of difficulties.
Initially, the purchase of shares was feared to be stolen.Also whether the purchased shares are salable or not.
That means becoming a stock broker was more of an exercise than investing in stocks.It was difficult for foreign investors to believe on the Indian share market ecosystem.
Read the article Evolution of Demat & Trading Account
Benefits of demat account to investors
Then in August 1996, there was a big change in the Indian stock market.National Securities Depository Limited (NSDL) was established on November 8, 1996.
He informed the investors about use demat account to store their shares But it wasn’t that easy, because the shares taken by the investor would now have to be converted to digital form.
No one knew how much the demat account would benefit in the future.
Let us see now Benefits of demat account to investors
- No anyone can interfere in the shares except the buyer and the seller.
- Since the purchase certificate of shares is in digital format, there is no fear of theft or loss of the certificate.
- This has boosted the confidence of foreign investors to invest in the Indian stock market now.
- Before using a demat account, to get certificates of ownership of shares investor were need to inform that company register.
- And now when you buy shares, you get immediately a shares ownership certificate.
- In addition to equity, you can use demat account to invest in mutual funds, gold ETFs, commodity futures.
- You can easily make a demographic details change in a demat account like you’re communication address, contact number and email address.
- No limit to buy and sell shares.you can easily buy minimum 1 shares or maximum no and sell it.
- You can trade with easily from home or anywhere.
- You can add your nominee details online.
- You can transferred shares from one demat account to another.
- If you want to closed your demat account then you can closed permanently from home within few minutes.
Disadvantages of demat account
Each coin has two sides, there are advantages also disadvantages to a demat account.
- Monthly/Annual maintance charges
- Tech savvy – All trading system depend upon computer.
- High frequency of share trading
- Additional contracts
- Regular supervison of your stock brokers
I hope you know Benefits of demat account to investors.
If you have any questions or doubts about advantages and disadvantages of demat account you can asked in comments section.
Frequently asked questions
Can nri open demat account in india?
Yes, nri open demat account in india.
Read this article