What is a Demat and trading account?
Demat, or dematerialised account, is a form of an online portfolio that holds a customer’s shares and other securities. It has negated the necessity of holding and trading physical share certificates.
Are you not satisfied with your regular earnings? Do you wish to have an additional source of income? If that’s the case, then trading could be the cure to your disease.
“There are many who wishes the same but only those tastes the success who really work on it.” Therefore, only having a dream is not enough, a proper understanding and awareness are required to implement the plan of having additional money in your hands.
Well, there are many things that are required to be known before trying hands in the trading and investing world, but one thing that confuses the beginners most is the concepts of Demat and trading accounts. There are many who faces difficulties in understanding the difference between these two terms, Demat and trading account.
If you also want to have a crystal clear view of these terms, then read the full article.
What is a Demat Account?
Demat Account also known as the dematerialised account is the one that provides facility of holding shares and securities in an electronic format. At the time of online trading, shares are bought as well as held in a Demat account, therefore stimulating easy trade for its users. A Demat Account holds all the investments that an individual makes in shares, bonds, government securities, exchange-traded funds, and mutual funds in one place only.
What is Dematerialisation?
The process of converting the physical share certificates into the electronic form, which is a lot easier to maintain and is accessible from anywhere throughout the world is known as Dematerialisation. An investor who wishes to trade online is required to open a Demat with a Depository Participant (DP). The objective of dematerialisation is to eradicate the need for the investor to carry physical share certificates and stimulating a seamless tracking and monitoring of the holdings.
How to open a demat account?
In the today’s world, where everything is moving on the online platform, the delay account has also made its way via the Internet. Now, one can easily open the demat account by sitting at his/her home. Here’s the was by which you can apply online for the demat account.
What are the advantages of a demat account?
You could avail the following benefits, if you open a demat account:
What is a trading account?
For buying and selling the stocks, it is necessary to open a demat account as well as a trading account. We have discussed about the demat account, its benefits and the procedure of opening it. But, What is trading account?
A trading account is delivered by a stockbroker, and it enables a user to buy or sell the securities. The trading account of a trader is linked to the bank account for the purpose of providing the essential liquid cash to either buy or sell the securities.
A trading account could be defined as an interface that enables buying and selling of the shares. It is the account that acts as an interface between the investors’ bank and the Demat accounts.
Shares that are purchased through this trading account are credited to one’s Demat account. The shares that are sold are debited from the Demat account and sales proceeds are credited to the bank account.
One thing to note is that there is no restriction on the number of Demat accounts that an individual can avail of.
What is the procedure of opening a trading account ?
What are the Benefits of opening a demat account?
Following are the benefits of trading account:
What is the difference between demat and a trading account?
Though both the accounts are very crucial for the smooth trading in the stock world, there are some points that differs these two accounts. These points are listed below:
As discussed above, the understanding and awareness of both trading and demat account is very important to begin with the process of investing in the trading world.
While, trading account is the one that
helps you buy and sell shares in the stock market, demat account is that one account which acts as a storage to store the shares you buy in digital format.
Happy (and smart) investing!!
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