Investing in stocks has become an increasingly popular option for people interested in building wealth. With technological advancements, it has now become easier to invest in stocks and track your portfolio. One of the key things needed to trade on the stock market is a demat account. In this article, we will discuss what a demat account is, why you need one, how to open it online, and how to Buying Stock Today through it.
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What is a Demat account and why do you need one?
Shares and securities are held electronically in a Demat account. It eliminates the need for holding physical shares, making buying and selling stocks simpler and easier. The benefits of demat account opening online are as follows:
Understanding the basics of a Demat account and its benefits
- Safekeeping of securities – In a Demat account, securities such as shares, bonds, government securities, etc., are kept in an electronic format that eliminates physical security risk.
Ii. Easy securities transfer – Demat accounts make it convenient to transfer securities without paperwork, endorsement, and stamp duty.
iii. Reduced paperwork – As securities are held electronically, there is less paperwork involved. Moreover, it eliminates physical share certificates.
- Convenient and cost-effective – With a Demat account, you can buy and sell securities online, making it both convenient and cost-effective.
How to open a Demat Account online
No longer are the days when opening a Demat account meant visiting multiple offices and submitting tons of paperwork. With online processes, opening a Demat account is easy.
Steps to open a Demat account online
- Choose a Depository Participant (DP) – A DP is an agent of the depository who facilitates the opening of a Demat account. Banks, brokerage firms, and other financial institutions can act as DPs. Choose a DP that suits your requirements.
- Fill up the online application form – Once you have selected your DP, you will need to fill up the online form. The form will ask for basic personal details, bank details, and PAN card information.
- Upload the required documents – After filling in the application form, you need to upload the required documents. The documents will include a scanned copy of your PAN card, residence proof, and a passport-sized photograph.
- E-Sign verification – Once the documents are uploaded, e-Sign verification is performed. It is a one-time password (OTP) based verification process that requires you to authenticate the e-signature by entering the OTP received on your mobile number linked to your AADHAAR.
- Depository receipt generation – After the verification process, a depository receipt is generated. It carries the details of the Demat account and acts as proof of ownership of the account.
- Account activation – The final step in the process is account activation. After the DPP verifies receipt, the account is activated, and you can use it.
Documents required for opening a Demat account online
To open a Demat account, you need to submit the following documents:
List of documents needed for opening a Demat account online
- PAN Card – It is required for identification and tax purposes.
- Residence proof – An AADHAR card, passport, driving license, or utility bill can be submitted as proof of residence.
iii. Bank account details – A canceled cheque or bank statement will be required to verify the bank account details.
- Passport size photograph – A recent passport-sized photograph needs to be uploaded during account opening.
How to buy stocks through a Demat account
Once your Demat account is activated, buying stocks is easy. Here are the steps to follow:
Steps to follow to start buying stocks through your Demat account
- Research – You need to research and select the stocks you want to buy. You can use several tools online to analyze stocks, including financial metrics, company reports, and analyst recommendations.
- Place your order – Next, submit your buy order to your broker. You can place your order online or call your broker.
- Confirmation – When your order is executed, you will receive confirmation from your broker. It would include details like the number of securities purchased, their price, and the total amount debited from your account.
- Settlement – On settlement day, the shares will be credited to your Demat account.
- Tracking – You can track the performance of your purchased securities in your Demat account. The DP will also send regular statements reflecting your securities.
Conclusion
In conclusion, opening a Demat account is an essential first step in investing in the stock market. It offers numerous benefits and eliminates many complexities of holding physical shares. With online processes, opening a Demat account is now quick and convenient. Once you have created a Demat account, buying and selling shares is also easy. With research and careful consideration, investing in the stock market can help you build wealth over time.
