Getting ready to be an investor in stock market? Then, you will probably have heard about demat account. A new demat account opening is the first thing every investor do nowadays as it brings in lot of advantages. Since its advent in 1996, demat account and electronic trading has changed the whole scenario in Indian stock market. It helps the investor reduce the hassles of paper work that comes with online trading. Moreover, it makes them less immune to forgery and frauds.
The benefits of demat account are in plenty. Mentioned below are few:
Safety
All the concerns regarding safety and security in future trading will be taken care of by a new demat account opening. Before its advent, shares or any other financial assets were transferred, stored and shared in the form of paper. The risk of damage or loss was always high. To retrieve duplicate papers was always a hassle. Another benefit of demat account is that it holds your assets and securities in electronic form thus ensuring safety and security.
Saves Time and Energy
As the certificates are stored in paper form, it took at least 14 days for the papers to get transferred from the seller to the RTA to the buyer. Demat account has reduced this time frame to 2 days. This saves lot of time and energy as the investor is concerned.
Access to Live Information
One of the most important benefits of demat account is that it provides the investor easy access to market information. Investor can monitor live market updates, examine investments and can even make smart and pro-active decisions. This data is easily accessible through a smart phone, computer or any other electronic device
Reduced Errors
Handling physical share certificates comes with lot of paper works which results in it being prone to errors. However, since the inception of demat account and electronic trading this has been reduced considerably as the work is being done mostly by the computers.
Easiness in Handling
Since the documents are in electronic form and are stored in one place, managing them becomes easy. You will need to access these records during tax filings and audits. This would not have been the case if they were in scattered in physical form.
Easy Transfer
In case of the death of the demat account holder, records in electronic form can be easily transferred to the kin or nominee. As in the case of any other bank account, the bank asks for a nominee when you open a demat account. If the papers are in physical form, this transfer would have been a complicated process requiring lot of paper works.
Decreased Cost
Holding the records in physical form incur huge costs including stamp duty, handling charges and other expenses. One benefit of demat account is that it negates all these expenses.
Increased Liquidity
Liquid investments will always be beneficial as they can be accessed whenever required. Stock market investments in the form of stocks and mutual funds can be used as a collateral to obtain loans from banks. These benefits are not possible without a demat account.
Demat account have helped foreign investors to have access to Indian stock markets. The rise in foreign money have invariably helped users and Indian economy. No wonder it is regarded as a gateway to Indian financial market.
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