For new investors who find stock market investing confusing, a demat account is your easy gateway to managing your money online.
A demat account allows you to buy, sell, and hold your stocks, mutual funds, and other securities in digital format – no more piles of paper certificates! It is like your virtual locker for safely organizing all your investments in one place.
Here is a list of things that you can do using a Demat account and a demat account app like mStock:
- Buying and Selling Stocks:
A key use of demat accounts is to trade stocks hassle-free. If you wish to invest in a publicly listed company by purchasing its shares, all you need is funds in your linked bank account. You can log in to your demat account and place buy orders to own the company’s stocks digitally in your portfolio.
Similarly, suppose you already own stocks and want to sell the shares later at a good price or to cut losses. In that case, you can easily do so by placing sell orders via your demat account in trading apps like mStock. The stocks get sold directly from your account, and sale proceeds get credited into your linked bank account.
- Investing in Mutual Funds:
Mutual funds allow investors to put money into a basket of different stocks and bonds. Professional fund managers handle picking various companies and securities to include in the mutual fund.
So, without analyzing individual stocks, as an investor, you can use a mutual fund to gain exposure to a diverse mix of shares. DEMAT accounts make investing in mutual funds very convenient.
- Holding Bonds and Debentures:
Bonds are basically like lending money to governments or companies for a fixed period. In return, they pay you a regular, fixed-interest payment. Debentures also work the same way – you loan money to get guaranteed interest. When you wish to invest in bonds or debentures, having a DEMAT account makes things very easy.
You can purchase and hold all such debt investments securely in your DEMAT account digitally instead of handling physical certificates. The account directly credits your bank account with any interest money the bond issuers pay you at regular intervals.
- Participating in IPOs:
Initial Public Offerings (IPOs) are when companies first sell their stocks to the public. If you want to buy shares online during an IPO, you’ll need a DEMAT account. Your DEMAT account will help you receive and hold these newly issued shares securely.
- Converting Physical Securities:
In the old days, people used to have physical certificates for stock market trading records. But now, everything is digital. If you still have physical certificates, you can convert them into electronic form and store them in your DEMAT account. It’s safer and more convenient.
Conclusion:
Every investor must use online tools like an open trading account & a demat account to grow money safely. No matter your investing goal – be it trading company shares, buying mutual funds, or managing a portfolio – opening a demat account makes the entire process smooth and stress-free for beginners! It acts like one master locker to store, track, and manage all your investments in stocks, funds, and bonds digitally in one place. So now you don’t need to panic about losing paper documents anymore!