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Why You Should Have A Demat Account?

To begin trading in the stock market, firstly fix proper goals and the time by which you wish to achieve those. If the goals have to be achieved in a short term, you can be a trader which will provide profits in a short duration but is associated with risks as well. If you have long term goals like retirement plan or child’s marriage, you can choose to invest in shares for a long term.

One should also know how much risk you can afford to take while investing. After deciding all these, one should make proper efforts in finding out a suitable stock broker. There are 2 types of stock brokers, full service brokers and discount brokers. If you are confident and knowledgeable enough to trade by yourself and don’t need any research advice or support, you can choose a discount broker.

If you are a beginner in the world of investing, you can opt for a full service broker who will provide complete support and guidance for your investment. You should also compare the charges of various brokerage houses before you end up choosing one.

Why do you need a stock broker? Through a stock broker, you can open a demat account with a depository either NSDL or CDSL. What is demat account? You need this account to start trading or investing in the share market. It is the account which holds all your shares in electronic form and it is the safest mode as well.

Previously, shares were transferred in physical form as well. But SEBI recently came out with a notification stating that physical shares cannot be sold or transferred from April this year. SEBI has made dematerialization compulsory for transfer of shares.  Dematerialization is the method by which one can convert his or her physical shares to electronic form.

Those who still possess physical shares can contact their stock broker and get a DRF form. You have to fill DRF form and submit it along with the physical share certificates. The physical shares will be dematerialized by the registrar, converted to electronic form and will credit those to your demat account.

Demat account can be opened either online or offline but online is the easiest way as it does not consume much time and requires few documents like PAN card, AADHAAR, personalized cheque. Demat account helps you to check your investment profile anytime in an easy manner.

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Tuesday, 19 November 2019

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