Demat Account: What Is It And How It Is Different From Trading Account
Demat Account is a short term for dematerialization account and is a prerequisite for stock investment and many other tools of investments. It is your gateway to kickstart your trading journey. Just like with bank account you can not avail the services of a bank, similarly without a demat account you can not start trading.
WHAT IS A DEMAT ACCOUNT?
Your financial securities are stored in an electronic format on a demat account. It's like having your financial securities, like bonds, mutual funds, stocks, government securities, and other asset classes, in a bank account. An investor can store and keep track of all of their investments in one place online with a Demat account.
HOW TO OPEN A DEMAT ACCOUNT
Opening a Demat account is a fairly simple process. This is what you must do:
Fill out the account opening form by going to the DP office or website.
You need to provide copies of your Aadhar card, PAN card, identity document, proof of address, and passport-sized photos in order to open a Demat account.
Examine the papers that contain the terms and conditions.
In-person verification comes next. Usually, a representative from the DP will visit your house.
You might be able to finish the Aadhaar verification online with certain DPs, though.
You will be given a client ID, a Demat account number, and a password after the formalities are finished.
This allows you to log in and begin investing.
Still, opening a Demat account is just the first step. You must first open a trading account in order to trade stocks. The same DP can be used to open this as well.
DIFFERENCE BETWEEN TRADING ACCOUNT AND DEMAT ACCOUNT
While a demat account only keeps the stocks you buy through a trading account, a trading account assists you in executing buy or sell orders in the market. You buy shares, for instance, using your trading account. The digital share certificates will be credited to your Demat account and the balance of your trading account debited.
The share certificates will be taken out of your Demat account when you sell your shares, and the money from the sale will be credited to your trading account.
