What is a Demat Account and its benefits?
Hello friends today again with a new topic, have you ever had the question What is a Demat Account? And How Does It Work? You must have seen many articles and posts about this on the internet in today's world, but you will never find such detailed information on any website. I will tell you the details about demat accounts and their benefits through this article. Stay tuned and read the article till the end - let's get started
Nowadays in this internet world people can buy or sell shares in the stock market only through a demat account. To open this account, you must have a PAN card. You must open a demat account with a PAN card.
A few years ago, whenever you bought shares in a company, the company would send you some documents related to the shares. Those papers used to prove that you invested in that company and bought shares in that company, but now with the advent of demat accounts, everything has changed and is keeping pace with the present day. So friends let us know in detail what is this Demat account and why it is so important for us. Because without complete knowledge about it, you cannot invest or buy shares or buy shares and end up losing.
What is a Demat Account?
People use this demat account to buy or sell shares. For example, people keep their money in bank accounts, similarly, people in the stock market keep their shares in demat accounts.
As we withdraw money from our bank account, we receive it in physical form or hold it in our hands. But as long as it is in the bank it is a digital currency. Whenever we pay by debit card or credit card anywhere after shopping or any other purchase, we also use a form of digital payment which is electronic money transfer.
Similarly, when we have shares in our demat account, we can digitally transfer them to another person's demat account. In this case, there is no need to keep the currency of the shares in physical form.
Now if I say it in another way, the facility of keeping shares digitally ie electronically is called demat. The full name of this demat is "Dematerialize". The process of converting securities i.e. shares etc into physical form is called dematerialization.
Now again, I said in the paragraph above the beginning of the post that in the past, whenever you bought a share, the company would send you all the documents related to that share to your home. Because it was the only proof that you invested in shares. But whenever you sold those shares, what used to happen was that the deed went to the company's office.
At that time the company would see what the price was when the shares were sold and get paid accordingly. This process was not only time-consuming but also very complicated. So most of the people avoided investing in shares at that time.
But today this world has progressed a lot with the current times. As soon as you buy shares, your account will be credited within some time. And if you sell any shares, you will be paid within some time. These days, you don't even need a computer to buy or sell shares, you can do it all from your mobile in no time.
You need a strong password to access the demat account and you need to enter the transaction strong password for your transactions.
How to open your Demat and Trading Account in Zerodha?
Necessary documents are required to open a demat and trading account in your name at Zerodha.
Documents required:-
Below you will find detailed information about the documents required to open a demat and trading account at Zerodha Before applying for a demat account, make sure to prepare photocopies or e-copies of all these documents and save them on your mobile or computer:
- PAN card
- Both sides of the Aadhaar Card
- 2 recent Passport-Size Photographs
- Canceled cheque/savings bank account passbook
How to Open a Demat Account in Zerodha?
Now here I will give you complete information about the Demat account opening procedure in Zerodha which you can follow yourself to open your account for sure but friends don't miss any step.
Step 1: First of all you search for Zerodha from a computer browser like Google Chrome. Now click on the first Zerodha website that appears in front of you and click on 'Open Account'.
Step 2: Fill out the form completely – here you enter your full name like first name and last name, mobile, and email, and click on 'call me'.
Step 3: Now you will get a call from the Zerodha local representative, and he will book an appointment to meet you to sign the account opening form and collect all your documents. You have to decide when you can devote time or be free for this.
Step 4: Now you have to pay the account opening fee using net banking or debit card. All information or copies of which will be given by the representative.
Step 5: After submitting all your documents, your demat and trading account will be opened within 4-7 days.
If you submit the form online then you need to fill and send the application to the given address (Zerodha Official Address).
If you want to invest your money in this share market then you can create your account with the discount broker "Zerodha". In this, you can open a demat account very quickly and very easily and also buy shares in it. I have given the link below.
How much does it cost to Open your Demat Account?
If you think that you need to spend a lot of money to open a demat account, you are wrong. You can easily open a demat account for just 300 to 700 RS and start investing in shares. Now I think the worry about opening a demat account is gone.
To open a demat account, you only need to spend Rs 300 or more. But if you think of operating a DP demat account then you have to pay a lot of fees. There are separate fees for everything. This fee may vary from company to company.
The first fee charged is the account opening fee.
After that, the fee charged to you for managing the account is the annual management fee. The institution charges this fee at the outset and maintains the account throughout the year.
Now there is the custodian fee which depends on the number of shares you have, which the company charges at once or monthly. The duration of the fee charged depends entirely on the company.
Transaction fee means whenever a share is exchanged between two demat accounts, the company charges a separate fee for it. That fee may vary according to the number of shares or their value.
If you are completely new to this stock market then I suggest you take the help of a broker first before investing.
Who can open a Demat Account?
In today's internet world, two institutes are working on demat account opening in India, The first is the very popular NSDL (National Securities Depository Limited) and the second is CDSL (Central Securities Depository Limited). All these depositories have more than 500 agents called depository participants. Their job is only to open new demat accounts. We also call them DP in common parlance.
You will know that it is never necessary that the DP is a bank and only that person can open a demat account. Also, many other institutions can open demat accounts. Some of the major companies among these companies are Sharekhan, India Infoline, etc.
You can open this account by visiting their office or you can open a demat account online at home with the help of the internet. You can open the account very easily with the help of your PAN card.
Advantages of Demat Accounts
I think you are opening a demat account, so let's not know what benefits we will get by opening this account. Demat account has many types of benefits, let's know about some of the main benefits of a Demat account:
- After you buy shares through a demat account, there is absolutely no possibility of your money being stolen or fraudulent because all shares are bought or sold electronically i.e. digitally. They are very safe as there is no risk at all.
- Transferring shares in the past used to take a lot of time which many did not like. Many times this work took months to complete. But not anymore, you can now transfer the demat account within seconds. And you will see that after a few seconds of sending, you will see it in the demat account of the person you sent it to.
- Back in the day, selling shares was a very difficult task as you read, and you could only sell shares in a group. Also different was that you couldn't sell the odd number of shares but now you don't, and with the earlier system very few people would have opened a demat account. Now you can buy and sell a single share through a Demat account as the earlier method has changed.
- Now if you open a demat account, you can nominate the account individually. This was not the case earlier, there were certificates for shares. The system has changed with the present times.
FAQ about Demat Account
Q. Can you transfer your demat account to someone else?
A. No, you cannot open your demat account in the name of another person but you can give or transfer your shares to another person if you want but for this, that person must also have a demat account.
Q. How many demat accounts can you keep at once?
A. You can have multiple demat accounts like a bank account. But there is a rule that you can open a maximum of three accounts in one company.
Q. What documents are required to open a demat account?
A. To open a demat account, you must have a PAN card Only through this PAN card you can open your account. Also, you must keep these documents with you to open an account. For example:-
- Voter card
- Passport
- Ration card
- Driving license
- Phone bill
- Electricity bill
Now I am telling you a very important thing before investing in shares through a demat account you need to understand the market well. After that, you can invest. If you are completely new to this then please take the help of brokers as they have been doing this for a long time. Brokers buy and sell shares on your behalf.
They have a good understanding of the market. They take a small fee from your profits and buy or sell shares on your behalf on behalf of your account. You can buy or sell shares with the help of First First Broker.
What did you learn today?
I hope you have liked my article on the Demat account key and how to open it. I always try so that readers don't have to search for that article on another website or blog on the internet.
This will also save the time of the readers and they will get all the information in one place. If you have any doubts about this article or you want to add something more to this article, then you can write a comment below. If you have any queries related to the Demat account, please comment in the comment box and let us know. I look forward to your comments.
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