Want to Invest in Bonds or Stocks?
So finally, you have decided to start trading or investing in shares?
Do you want to invest in an upcoming IPO?
Now, the next step is to know about the most important aspect of trading–Yes the ‘Demat Account‘ and why should you have one.
You will be familiar with this word if you trade stocks or shares as every shareholder needs a Demat Account for such trading transactions.
A Demat Account is opened by the investor while registering with an investment broker to facilitate electronic–paperless settlements of trades. A single Demat Account can take care of all your Bonds and stocks/ shares.
With a Demat Account Transfers or purchases of stocks/shares can then be initiated. Demat Account is just like an account in a bank as all the money used to purchase shares is debited to this account or in simple words, we need a bank account if we want to deposit money and make payments similarly we need a Demat Account if we want to buy or sell stocks.
So it is just like a bank account where shares take the place of Money. So a Demat Account is a must for trading and investing.
Demat Account is also referred as a ‘Dematerialized Account‘.
Documents required to open a Demat Account
- Voter’s ID/ Passport/ Ration card / Aadhar Card/ Driver’s license
- Bank attestation/ Statement/ Passbook
- Electricity/ phone bill
- Passport Size Photograph
You are required to submit the photocopies of the documents along with the Demat application form. Remember, to nominate someone while you open the Demat Account as we do while we open a bank account.
As a salary account, a Demat Account can be opened with no balance/ zero balance of shares and there is no minimum balance to be maintained either.
When you open an account, you will be allotted a Unique Identification Number, which you will need for all future transactions i.e. when you buy and sell shares.
You can open a Demat Account with any bank or with brokers and financial institutions.
Last but not the least; Share Trading can be lucrative and Demat Account transactions are safe and secure, but it’s better to learn all the market risks involved before you start investing in stocks.