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Demat: Many Problems: One Solution
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When you transact with your preferred bank, it maintains the documents of your transaction. Similarly, when you trade with your demat account, you will be able to maintain all the relevant documents like: share certificates, bonds, government securities, mutual funds and exchange traded funds in the most convenient way. Trading through Demat account is the safest way and all in one place. During online trading, shares are managed in a demat account, thus facilitating easy trade for the investors.
During the time of online trading, a demat account number is required to enable electronic settlements of all the trades. Demat account functions like a bank account, where the money and transactions are managed through a bank passbook. In a similar form, shares & stocks are kept in electronic form and the transactions (whether debit or credit) are managed accordingly. A demat account can be opened with no balance of shares. You can too have a zero balance in your account.
Benefits of having a Demat Account for Online Trading:
Gone are the days when you used to hold your shares in physical forms. It not only involves lots of paperwork, long process and also involves risk of falling into the trap of fake shares. Demat account is must to trade in India's stock exchanges.
Having a demat account is like maintaining a centralized approach to all your investments.
All the personal details of your account are automatically updated every time you transact. It is a very hassle-free way of updating your records.
Physical transaction of shares also involves additional cost of stamp duty. But whereas when you have a demat account you manage all the transaction online. Hence the additional cost rules out.
Over a period of time, physical shares tend to get destroyed with wear & tear. You got to be very careful in maintaining physical shares but where are with electronic transaction, Demat account is much preferred.
Having a demat account is not only hassle free, but also the most convenient & smart way to trading. If you somebody who enjoys trading with shares/ stocks, then having a demat account is a must without any extra thought.
The author of this article is a leading stock broker in India. He offers consultation in various instruments like equities, derivatives, currency derivatives, Mutual Funds,
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