Investment has become quite popular in today’s era. Everybody wishes to earn a little bit more and investing your money is a great way of doing that. One such kind of investment is trading in the stock market. You can buy or sell shares and earn profits. But, to do so, there is one crucial requirement- you need to have a Demat account. In India, depositories like NSDL and CDSL let you open a free Demat account through Depository Participants such as Motilal Oswal.
What is a Demat Account?
A Demat or dematerialized account is an account that provides the facility of storing and maintaining your securities and shares in an electronic format. Dematerialization is the process of converting your physical securities into an electronic form. This way, your securities won’t get lost, torn and stolen. Also, it’ll be easier for you to transfer your shares online without actually being there at the stock market and going through all the physical labor. You can easily access your securities from anywhere in the world.
As mentioned before, having a Demat account is crucial for investing in the stock. During trading, your Demat account will hold the shares and facilitate the easy transfer.
How to use Demat Account:
Using a Demat account is quite simple. But first, you need to open a Demat account. To do so, you need to follow these steps:
- Find a suitable Depository Participant (DP) after doing proper research. A DP will act as an agent to the Depository (NSDL and CDSL in India).
- Fill out the account opening form and submit the required documents (identity proof, address proof, PAN Card, etc.)
- In-person verification is initiated after the investor has agreed to the charges and terms of the agreement.
- After the successful processing of the application, you’ll be given a Demat account number. This number can be used to access your Demat account online.
After you have opened a Demat account, it is crucial that you open a trading account as well. A trading account is used to buy or sell shares online and links your bank account to your Demat account. You can use a mobile trading app to invest in the share market. When you buy shares through a trading account, the money will be debited from your account and shares will be credited in your Demat account. It takes about T+2 days for the credit/debit of shares in your Demat account.
Opening and using a Demat account is quite a straightforward task. You can opt for DPs such as Motilal Oswal to open a free Demat account online, that too in a short period. It is convenient and time-saving. So, all you have to do is open your Demat account and start investing.