People earn money through lot of sources in India. After spending the required amount for basic purposes like food, the surplus amount can be invested in various avenues. The best source of investment in the 21st century is shares of a company. Ownership of a company is divided into several parts known as shares which are held by number of people. Owner of a share has a substantial right in the working of a company. Together they make up the market value, a company has in the market. Some people buy shares to trade them in order to earn profit. This share trading was done in the form of physical certificates in the earlier days. But the process was lengthy and required a lot of paperwork. In order to solve this problem physical certificates were converted into electronic format commonly known as the Dematerialized form for better tracking and trading. However, in order to deal in these electronic shares one has to open a demat account.
A demat account works similarly like a bank account. Shares are dematerialized into electronic format and credited to the account of demat holder. Upon payment shares get transferred and can be further traded according to account holder’s needs.
Benefits of a demat account are:
Traceability:
Opening a demat account allows a trade to keep a track record of his/her shares bought and sold. Shares traded are recorded on a real time basis and can be easily traced using demat software.
Easy to hold shares:
Demat account allows its holder to trade shares in electronic form which reduces the burden of holding them in physical form. Holding them in electronic format also reduces chances of buying fake share certificates.
Linking with a bank account:
A demat account can be linked with a bank account which allows its holder to pay for the shares automatically directly from their bank account. Bank can be directed to automatically accept the payment received upon sale of shares.
Cost and time saving:
Rather than dealing in physical shares, electronic shares can be transferred easily from one demat account to another with no lag in time. Moreover, there is no need to pay for unnecessary brokerage or transfer amounts if dealt in physical form.
Opening a demat account becomes really economical.
Greater convenience:
Transfer of shares becomes really easy and hassle free. Earlier physical presence of both buyer and seller at the stock exchange was needed to seal the deal. Now the need has been eradicated. With a demat account, the whole process of buying and selling has become really convenient.
Easy access anytime anywhere:
A demat account can be accessed anywhere by its holder anytime using his/her Smartphone with an internet connection.
Nomination facility:
One of the best features of a demat account is that it allows its holder to assign a nominee to it in case he/she dies. It allows the nominee to operate the account and deal in the shares independently.
Trading shares has become easy with dematerialization. It is necessary that one opens a demat account. He/she must search for the best demat account in India in order to get the best facilities. According to government, one has a choice to open a demat account but it is recommended to open them anyway due to all the added benefits.