The concepts of free demat account in india gained prominence in 1996 as prior to that shares were traded in physical form and sold. The main importance of a demat account is that it allows the investors to hold their securities in an electronic form. In fact the entire process of holding or even monitoring stocks goes on to become efficient and a lot faster.
The benefits of a demat account
There are some distinctive advantages of a demat account that you need to be aware
Physical securities are more prone to risks or any form of damages like theft or losses. Worse are that fake securities or bad deliveries go on to pose further risks. You can combat all these risks with the help of opening a demat account as it provides you with an option of holding all the securities in an electronic form.
To maintain physical securities is a tedious job. In addition keeping a track of their performance is an added responsibility as well. The concept of a demat account enables you to hold all the securities in an electronic form as you can monitor it as per your desires.
When it was physical securities buying or selling of securities was possible in prescribed quantities. The convenience of dealing with odd lots or even a single stock was not available. By the emergence of demat account such issues are put to rest.
Reduction in costs
With physical securities there are added costs that come into play. This can be in the form of stamp duty, handling charges along with a host of other fees. You can pretty much cut down on all these expenses with the help of a demat account.
Reduction of time
As there is no form of paperwork involved the total time in order to complete a transaction is reduced drastically. This reduction of time forces an account holder in order to make more purchases and even sales of security holdings with greater efficiency and that too in a short span of time.
The concept of demat account is simple and hassle free. In the modern age of today there are a must in terms of financial planning.
The reasons why you need a demat account
As far as the conversion of stocks from physical to electronic is option because an investor can hold the stocks in either form that they desire. But the catch is monitoring of physical securities becomes a lot difficult when you compare it to monitoring them digitally.
Secondly it makes it really difficult to buy or sell shares when you hold them in physical form. The number of investors or agents who are planning to purchase physical shares is a lot less when you compare it to their counterparts.
Another notable feature is that a lot of banks or lenders go on to provide loans on the basis of shares that are lying in a demat account.