Demat Account is a short term for dematerialization account. It is a prerequisite for stock investment.
The financial securities are stored in an electronic format on a demat account. It's like having financial securities, like bonds, mutual funds, stocks, government securities, and other asset classes, in a bank account.
Investors can store and keep track of all of their investments in one place online with a Demat account.
The first step for opening a demat account is to fill out the account opening form by. After this one needs to provide copies of Aadhar card, PAN card, identity document, proof of address, and passport-sized photos in order to open a Demat account.
After verification with certain formalities, a client ID, demat account number and a password is given. This allows to begin investing but to trade stocks one needs to have a trading account.
While a demat account only keeps the stocks one can buy through a trading account, a trading account assists in executing buy or sell orders in the market. One buys shares, for instance, using a trading account.
Compiled by Syed Muskan