By investing in securities is one of the areas where you can earn some quick bucks. A little bit of effort is needed and all you need to do is to undertake proper planning and complying with a given set of rules along with regulations. To make it big in the stock market you need to have an idea about dematerialization. All of us are living in a digital age where money making activities have gone on to change considerably and numerous people have benefitted from it. Even the stock exchanges have moved over and shares in physical form are transferred to electronic form. This is basically the modus operandi of the best demat account in India.
How dematerialization helps
Dematerialization is known to offer a lot of benefits that all of us might not be aware.
- Common bank- Not only dematerialization helps to trade stocks, it works wonders for mutual funds and even bonds. As an investor you can hold all your details in a single account
- Automatic updates- as there is a common account for all your account transactions, every time there is no need to be providing details to the company. The demat account is known to be representing you and all basic information about the transaction is presented.
- The odd problems solved- earlier there was a major problem in solving the settlements as they dealt in lots. The sellers or buyers could not settle for a single transaction but demats account has solved this scenario and an investor can trade in any number of shares they want.
- Delivery risks- when there is no form of paper risk involved, thefts and wrong delivery of shares seems to be a thing of the past. This ceases to be one of the major benefits of electronic trading of shares. Irrespective of the type and number of shares the system is going to ensure a proper credit of shares in the demat account. This same logic is applicable to other type of transactions like stock bonuses and stock splits.
- Cost reduction- when it is a demat account there is no need as far as stamp duty for securities are concerned. This has paved way for a situation where there is significant cost reduction. In the days earlier the stamp duty was 0.5 % for each stock, that once again could be avoided by dematerialization
- Easy holding- the moment you tend to hold securities in physical form they are vulnerable to physical or loss from theft. A small damage could end up costing you a fortune. But this does not seem to be the case with a demat account. The company bears the responsibility of holding and even to maintain your account. This would be the best way by which you can hold securities. In the event of an account holder passing away there is an option of a nominee. The securities are automatically transferred to the nominee.
To conclude these are some of the main features of a demat account as the shares are held in physical form.