The number of investors in the Indian stock market has increased from 17.9 million in 2015 to 87 million in January 2024. This reflects the increasing interest in the Indian stock market and the growing ability of people to invest.
However, the first step to start your investment journey in the share market is to create a Demat account. Having a demat account eliminates the need for storing physical certificates and makes the process of trading in the share market easier.
Continue reading to understand why opening a Demat account is essential in 2024.
What Is a Demat Account?
A Demat account, short for Dematerialised Account, serves the purpose of securely keeping all your investments like shares, bonds, mutual funds, and government securities in an electronic format. It is mandatory by SEBI to have a demat account to participate in the stock market.
Whether you are an Indian citizen or a non-resident Indian (NRI), you need a demat account to actively invest in the Indian share market from anywhere in the world owing to its convenient digital format. Many brokers also offer a free Demat account.
A Demat account is opened with a central depository such as the National Securities Depository Ltd and Central Depository Services Ltd. These institutes further appoint Depository Participants who perform the function of an intermediary between an investor and themselves.
A Demat account can be opened with a stockbroker or any financial institution like a bank as well. Many brokers and online investment platforms also offer a free trading app which is an added advantage to trade and invest on the go.
Reasons You Need a Demat Account in 2024:
Here are the reasons why opening a Demat account is absolutely necessary for an investor in today’s market:
- Centralized Investment Vault
For easy management of stocks and constantly monitoring transactions, a Demat account can be very helpful.
It enables an investor to streamline his or her portfolios and enhance their security, as they receive immediate notifications for any transactions made through their Demat accounts.
- Enhanced convenience
All kinds of securities like stocks, bonds, and mutual funds are stored in an e-format in a consolidated manner adding to an investor’s convenience. A web platform or app can be used to open a demat account and track a portfolio, making it an easier and a lucrative option.
Owing to real-time updates, an investor can keep track of his investment without the hassle of saving everything in a hard copy format.
- Saves Time
Online demat accounts have eliminated the need for any in-person submissions, ensuring quick processing and streamlined management of accounts.
Since there is no manual handling of records and transactions are handled digitally, an investor can save time and effort. They can also focus on researching investment plans.
- Reduces Chances of Fraud
With the help of a Demat account, the need for physical share certificates is eliminated as it allows investors to digitize securities.
Everything is protected by two-factor authentication and the history of transactions is recorded in real-time. Moreover, all the depository participants have to adhere to strict rules and regulations which lowers the chances of fraud.
Conclusion
A Demat account is vital for an investor as it enables effective management of investments and allows constant monitoring of securities. The electronic format of a Demat account minimizes paperwork, consequently reducing the risk of forgery and eliminating the loss of physical certificates.
