What is demat account and how to open demat account

Demat Account: If you also want to become an investor and want to earn money by investing and trading in the stock market, then for that you need Demat Account. Because without Demat Account, you cannot hold share transactions and shares.

Do you know what is demat account, how to open a demat account, who opens a demat account, what is the difference between a demat account and a trading account, and what are the advantages and disadvantages of a demat account, then you have come to the right article.

Through this article today, we are going to give you complete information about a demat account, which you should know before opening a demat account. If you are also thinking about investing in the stock market, then definitely read this article till the end.

What is Demat Account

sequence

1 What is Demat Account (What Is Demat Account )

2 Demat account opening

List of apps to open 3 demat accounts

4 How To Open Demat Account (How To Open Demat Account )

Follow the following steps to open 5 Demat Account

6 Difference Between Demat Account and Trading Account

7 Who can open a demat account

8 How much money is required to open a demat account

9 Who opens a demat account

10 how to earn money from a demat account

11 Advantages Of Demat Account (Advantage Of Demat Account )

11.1 #1 – Security

11.2 #2 – Time-Saving

11.3 #3 – Reduction Of Mistakes

11.4 #4 – Share Transfer Easily

12 Disadvantage Of Demat Account

13 Some Common Questions Related to Demat Account

14 You Learned: What is Demat Account 

14.1 Related Articles 

A demat account is an account through which investors can buy and sell shares. Demat account is used for share transactions in the same way as people use bank accounts to do money transactions.

Just as you need a bank account for the transaction of money in the bank, in the same way you need a Demat account for the transaction of shares. You cannot buy and sell shares without a Demat Account.

In Demat Account, our shares remain in digital form so that they remain safe. The full name of Demat is Dematerialized. Which means that which cannot be touched. When you sell the share through Demat Account, after 1 or 2 days, the money of the share comes to your bank account.

In a Demat account, you can hold various financial securities like shares, stocks, initial public offers, digital gold, bonds, non-convertible debentures, government securities, exchange-traded funds, mutual funds, intraday, etc.

Simply put, a Demat Account is an account through which we can hold shares or financial securities and do their Buy-Sell.

Demat account opening

The demat account was started in India in 1996 after the Depository Act. Before the demat account, when people used to buy shares, they were given a certificate by the company which was called share certificate.

This share certificate later proved that he was the owner of the share. In this, each share had a certificate. Like if you have 100 shares then there will be 100 certificates also.

But there was also a problem in them that due to manual work, they were more prone to mistakes and there was also a fear of being lost and stolen. Apart from this, it used to take days for the transfer of shares.

To solve this problem, a Demat Account was needed. In Demat Account, your shares are held in Virtual Form so that you do not have any fear of losing shares or being stolen. When you buy or sell a share, it takes 2 days for it to reach your Demat Account.

By now you must have understood what is Demat Account, now you know further how you can open a Demat Account.

How to open a Demat Account?

When we open a demat account, we do not open a demat account alone, along with it we have to open a trading account as well. We open both the trading account and the demat account from the broker, but the demat account that is there is with the depository.

The depository is a government body where our shares are kept and the record of ownership of shares is kept. There are mainly two depositories in India CDSL and NSDL. Our shares are held in digital form near these depositories.

You have many options to open a Demat Account – the main ones are Full-Service Broker, Discount Service Broker, and Banks.

If you open a Demat account with Full-Service Broker, then they also give you tips related to the share market along with the platform. Due to their service, these brokers also charge more.

There are Full-Service Brokers in India like IIFL, Motilal Oswal, Sharekhan, etc.

Discount Service Broker provides you a platform but they do not give you any kind of tips. Due to less service, they charge less. There are Discount Service Brokers like Upstox App, Zerodha App, etc. in India.

You can also open a Demat Account from the bank. In India, banks like SBI, and ICICI provide the facility of opening Demat Accounts.

If you need tips on investing in the stock market along with opening a Demat Account, then you can open a Demat Account from a Full-Service Broker. And if you want to open a Demat Account for less money then you can open your Demat Account from Discount Service Broker.

Follow the following steps to open a Demat Account

• To open a demat account, first, download the Upstox App
• create an account on upstox
• Enter your email and mobile number
• Verify Email ID
• Enter your PAN card number
• Enter your personal information
• confirm your address
• Make your digital signature in Upstox
• upload your selfie now
• Enter your bank details
• Pay Demat Account Opening Fee on Upstox
• Congratulations, in this way your Demat account will be opened.

If you are having trouble opening a Demat account, then definitely read this article – What is Upstox App and how to open Demat account in it.

Difference between Demat Account and Trading Account

Many investors do not know what is the difference between Demat Account and Trading Account. But if you want to become an investor then it is important for you to know the difference between them.

• In the Demat Account, we can only hold our shares and through Trading Account we can buy and sell shares.
• Trading Account is managed by the broker while the Demat Account is managed by the Depository.
• You can open any number of trading accounts in one Demat Account.
• You can also do Intraday Trading only with Trading Account because you do not have to hold shares in it, so Intraday Trading can be done even without Demat Account.
• Whenever you open a Demat Account or Trading Account, there is no such separation as to which is your Demat Account and which is your Trading Account. Its Login ID and Password are the same but as we mentioned above you can only hold shares inside Demat Account and with Trading Account you can buy and sell shares.

Who can open a demat account

Any person above 18 years of age who has a PAN card can open a Demat account. If you are a student and you fulfill the eligibility criteria to open a Demat account, then you can also open your Demat account and do trading.

How much money does it take to open a demat account?

You can open a Demat Account very easily for 300 to 600 rupees. And you can start investing in stocks. You can also open a demat account for free on a platform like Groww. Although you can open a Demat Account for very little money, DP charges you many types of fees to run Demat Account.

Such as Account Opening Fees, Annual Management Fees to manage the account, Transaction Fees for the exchange of shares between two Demat Accounts, etc.

Who opens the demat account?

Demat account opening in India is done by two institutions NSDL (National Securities Depository Limited) and CDSL (Central Securities Depository Limited).

There are many agents of these depositories who are called Depository Participants. In common parlance, they are called DP. The function of DP is to open a demat account.

Many banks in India provide the facility of opening a demat account like SBI, ICICI, PNB, SBI, etc. You can easily open a demat account by visiting these banks.

Apart from banks, many institutions also provide the facility of opening demat accounts to customers such as – IIFL, Motilal Oswal, Sharekhan, etc. You can also open a demat account by visiting the offices of these institutions.

Apart from these, you can open a Demat account in Discount through mobile applications like Upstox, Zerodha, Groww, etc., all these are discount brokers. By downloading these trading applications, you can easily open your Demat Account.

But keep in mind that to open a Demat account, you must be above 18 years of age and you must also have a PAN card.

How to earn money from a demat account

Along with opening a demat account, you should also open your trading account. After that buy good shares and hold them in your demat account. When the price of the shares you buy increases, then you can earn good money by selling them.

You must have known how much money is in the share market, once you understand it well, then you too can easily earn crores of rupees from the stock market.

Advantages of Demat Account

The advantages of a demat account are as follows –

#1 – Security

In Demat Account, your shares are held in digital form, which eliminates the possibility of your shares being stolen or lost. There is a fear of being lost and stolen if there is a share in physical. Therefore it can be said that your shares are safe in Demat Account.

#2 – Time-Saving

You must have also heard 'time is money. Earlier, when the paperwork for the transaction of shares used to take about 14 days. But with the Demat account, all the action is done within just 2 days.

#3 – Reduction of Mistakes

Many mistakes happen due to manual work in the physical and offline world. One of the biggest advantages of a demat account is that these wrong trades have come down significantly.

#4 – Share Transfer Easily

Through a Demat account, you can transfer shares very easily and simply. You can also transfer only 1 share through a demat account.

The disadvantage of Demat Account

While on one hand there are many advantages of the Demat account, on the other hand, it also has some disadvantages such as –

• Many brokers are not trustworthy they can misuse your account.
• One of the main disadvantages of a demat account is the expenses associated with opening and operating a demat account. Opening a Demat account includes Account Opening Charges, Transaction Fees, Guardian Fees, and Annual Maintenance Charges.

Some common questions related to demat account

What are the documents required to open a demat account?

You must have a PAN card to open a demat account.

How many demat accounts can be opened simultaneously?

By law you can have 2 demat accounts, however, they should not be with the same DP or broker.

What is the difference between a Demat account and a Trading account?

You can only hold shares in a demat account, but if you want to trade then you will need a trading account for this.

You have learned: What is a Demat Account?

After reading this article, you must have understood Demat Account Kya Hai and why it is important. If you also want to invest in the stock market, then definitely open your Demat Account and start investing.

Hope you liked this article written by us and all your confusion related to Demat Account would have been cleared. Do share this article with your friends on social media too.