If you are scouting for means of wealth creation, consider investing in the stock market. Investing in stocks allows you to earn good inflation-beating returns by taking on some risk. Moreover, you get to invest in stocks of various companies and other market-linked instruments. This helps create a profitable and stable investment portfolio.
For investing in the market, you need to hold a Demat Account. If you are thinking what is Demat Account, it is a depositary Account holding your shares and securities in an electronic format. The Account ensures your shares are one in place, secure, and easily accessible. Following are important pointers about Demat Account you should be aware of:
Demat Account types
Demat Accounts are primarily of two types. Both Demat Accounts work similarly; however, the difference lies in who can open them. Regular Demat Accounts can be opened by Indian residents. Demat Accounts can also be opened by non-resident Indians. Such an Account can be repatriable and non-repatriable in nature.
The procedure of how to open Demat Account is simple and hassle-free. There are two central depositaries in India – National Securities Depositary Limited and Central Depository Services Limited. These central depositaries interact with investors like you via a Depositary Participant. Several financial institutions and stock brokerage firms act as a DP. You can open the account with any DP of your choice.
Consider the DP’s service and associated charges to make a suitable choice. You can open an Account by visiting your nearest DP branch or applying online. You must also fulfil the mandatory Know Your Customer requirement for opening the account. Hence, keep the necessary documents handy for verification.
- Your DP will charge you a basic fee for Demat Account opening. This fee amount differs from DP to DP. Hence, explore the market, compare all options, and open an Account with a DP with the most affordable charges.
- You are also required to pay an Annual Maintenance Fee. You are liable to pay this fee amount whether the Account is operational or not.
- Brokerage fee is also applicable every time you make a trade. The brokerage fee is typically a percentage of your total trade value.
Linking Demat Accounts
Link your Demat Account to your Savings Account. This way, you can easily utilise funds in your Account to buy shares. Funds from your share redemption will also be credited to your Savings Account. This ensures your investment returns are secure. To make a trade, you need to have a Trading Account. Link your Demat Account to your Trading Account to make profitable trades on the go.
Adopt an investment strategy such as swing trading to make suitable trades. Avoid making impulsive trades. Redeem your share investment only when you attain a good value.