Tuesday 24 July 2018

A Complete Investors Guide to Opening a Demat Account Online

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A demat account is a lot like your bank account but instead of holding money in its basic form, it stores money and assets in the form of securities and stocks. It may contain bonds, debentures or shares. With the recent surge in the demand for stock markets, the world has resorted to electronically transferring securities to and from a demat account online, to another. 

To join the network of online trading, the first thing one needs to do is have a bank account, a transaction account and a demat account. Then he or she can successfully conduct transactions from the comfort of his or her home. Online trading has become extremely safe and all the loopholes have been covered thanks to demat accounts worldwide. This has led to a sudden increase in the demand for online trading as well.

Types of demat accounts available today

There are two main kinds of demat accounts. They are: 

  • Repatriabledemat account – The investments made from repatriable funds (funds that are stored in a separate bank account called NRE account and can be transferred abroad) are strored in repatriabledemat account.
  • Non-repatriabledemat account – The investments made from the funds that cannot be taken abroad (stored in NRO accounts) are stored in non-repatriabledemat accounts.


Working of a demat account online – A must know 

A demat account works a lot like a normal trading process. The only difference is that this trading is not physical and takes place electronically. First, the account holder places an order through the online trading account and that is why it is absolutely essential to link the demat account to the trading account. Once the order has been placed, the exchange shall start processing the order. The demat account online verifies the prices and the availability of the shares that have been ordered, before finalising or confirming the order. Once the order has been confirmed and processing has been completed, the shares are reflected in the holding statements. When a shareholder sells the shares, the amount of the shares (the cash equivalent of the shares sold) is credited to the trading account. 

A demat account is a must in today’s world because online trading has become the most dominant method of making money. In order to be an online trader and invest in securities, one must have an online demat account.

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