Things to Know Before Opening a Demat Account

Before opening a Demat Account, it is of utmost importance to know the different aspects behind it. A Demat Account is crucial as it provides security against theft and improper handling while facilitating simple access to your assets. It is now a requirement for buying stocks.

A Demat or Dematerialised Account electronically stores shares and other securities. Open a Demat Account so you can hold shares bought or dematerialized digitally, thereby simplifying Share Trading.

Process of Dematerialisation

This involves transferring physical share certificates that are simpler to maintain and accessible from anywhere. To engage in Online Trading, an investor must open a Demat Account with a Depository Participant. Dematerialization aims to make owning physical share certificates unnecessary for investors while promoting easy tracking and monitoring of holdings.

Demat Account Types

In India, there are three types of Demat Accounts:

1. A Demat Account for Indian investors.

1. Non-resident Indians can open a repatriable Demat Account. Funds here get transferred abroad, but they should be linked to an NRI Savings Account called Non-Resident External or NRE Account.

1. There are Demat Accounts that are non-repatriable. NRIs utilize them for their Indian assets, which you cannot move overseas. These are linked to your Non-Resident Ordinary or NRO Account.

Categories of Brokers

Regarding low brokerage Demat Account and fees, we generally approach discount brokers. Which broker has the lowest trading fees and brokerage costs in India? But before that, knowing the categories of brokers is highly valuable. Brokers in India include full-service and discounted ones. According to the investor's instructions, a discount broker executes stock and derivatives transactions.

A full-service broker provides wholesome facilities, including buying Mutual Funds, Insurance, and Initial Public Offerings or IPOs.

List of Necessary Documents

Before you open Demat Account, you need to prepare some key documents that should be submitted while opening the account. These include:

• Identity proofs
• Address proofs
• Bank Account statement/passbook
• Financial proofs (Payslips/Income tax returns bills)

Conclusion

While this list highlights some of the most crucial elements of a Demat Account, they have more advantageous features. Demat Accounts offer additional functions such as the option to freeze the account and transfer shares in odd lots temporarily. Demat Accounts have played a significant part in simplifying the trading procedure and have contributed significantly to the Stock Market's expanding popularity.

Opening a Demat Account is simple and convenient. You can register without hassles if you thoroughly remember the criteria and data.

Arjit Chalmela is a finance student who loves to write in his free time. He has spent considerable time researching the foreign exchange rate.