What is a demat account?
When we talk about demat accounts you need to remember that a demat account is one that holds securities and shares both in an electronic format. The main purpose of opening a demat account is to hold shares that have been dematerialised, in a way converting from a physical share to an electronic share. This then makes share trading extremely easy for the ones who want to do trade sharing online.
When we talk about the Best Demat Account in India, we see here depositories provide free demat account services like CDSL and NDSL with the help of intermediaries, stock brokers and depository participants. The charges of a demat account vary from the volume of money put in the account, the terms and conditions given by the stock broker and depository and the type subscribed.
Getting into the details
Dematerialised account or simply, demat account, essentially provides a facility to hold securities and shares in the online format. During online trading, shares are first bought and then held in a demat account, making the trade much more easier for the people who use it. A Demat account thus does the job of holding all investments that an individual can make in government securities, shares, bonds, exchange traded funds and mutual funds, all in one place.
What do we understand by dematerialisation?
Dematerialisation is the process of being able to convert the physical shares into an electronic format, this making this extremely easy to access and also to maintain from anywhere in the world. An investor who would want to trade online needs a demat account with a depository participant. The main reason behind dematerialisation is to eliminate the need or urge to facilitate a seamless tracking of go simply hold physical share certificates. This further leads to monitoring of the holdings.
A very crucial point to remember which choosing the best demat account for yourself is that it should be a seamless process between both you and your bank and broking account. This means that when you’re trading and investing in equities on a day to day basis there is a slight shift towards the digital platform side by investors so that they find it easier to use the internet and various other trading applications to finish the trades. This entire process needs proper access to both your demat and trading account and your bank account.
3 in 1 account
There are many options available. You have 3 in 1 accounts or 2 in 1 accounts. What does the 3 in 1 account do? It links all your accounts- your demat account, trading account and your bank account. This option is given mainly by those many brokers have have something of a group banking license. Most of the banking institutions out there give the option of a 3 in 1 account. The 3 in 1 account system works this way- the investor transfers a small amount from his savings bank to the trading account. The trading account with it’s unique id, carries out the trade of buying and selling securities. Last, but not the least, the purchase of the share is seen in your demat account.