If you want to start investing in stocks it is better that you open a demat account. Now the question arises what exactly is a demat account, it basically means an account which allows any investor to hold their shares in the electronic form. The stocks in a demat account remains completely in a dematerialized form. Dematerialization is a process where the physical shares are converted into the electronic format.
Any demat account number requires to enable the electronic settlements of all of the trades. It functions like a bank account where one holds all the money and the respective entries are basically done in a bank passbook. Securities too are hold are all held in the electronic form and are therefore debited or credited accordingly. If you were to open demat account, it is not necessary that you need to have any balance of shares per se.
Any demat account number requires to enable the electronic settlements of all of the trades. It functions like a bank account where one holds all the money and the respective entries are basically done in a bank passbook. Securities too are hold are all held in the electronic form and are therefore debited or credited accordingly. If you were to open demat account, it is not necessary that you need to have any balance of shares per se.
Why Should You Open Demat Account?
Since it is quite difficult to hold shares in its physical form due to its long involvement of paper works and of course the risk of fake shares; demat account is therefore created in order to simplify trading and investment. Even when the SEBI or the Securities and Exchange Board of India allowed for trades almost up to 500 shares that could be settled in physical forms this particular option is not preferable anymore. Any demat account holds all the certificates of the financial instruments like the bonds, government securities, shares, mutual funds, et cetera. So opening demat account therefore allows the conversion of physical shares into its electronic form.
If you were keen on opening a demat account the first thing you should do is fill up the application forms. You would have to sign on the agreement papers which include the ‘specific’ PoA or Power of Attorney to the specific broker for all of the transfer of securities for the margin purposes. It also helps in the settlement of trades and other funds from the account of the client’s bank and recovers the amount that is due.
The power of the attorney carries to the bank along with all the details of the demat account and hence must be executed in the name of the broker and not by the name of the employees. One must therefore remember the basics of investing and look into the equity and long-term and short-term goals since it is a risky proposition.
Since it is quite difficult to hold shares in its physical form due to its long involvement of paper works and of course the risk of fake shares; demat account is therefore created in order to simplify trading and investment. Even when the SEBI or the Securities and Exchange Board of India allowed for trades almost up to 500 shares that could be settled in physical forms this particular option is not preferable anymore. Any demat account holds all the certificates of the financial instruments like the bonds, government securities, shares, mutual funds, et cetera. So opening demat account therefore allows the conversion of physical shares into its electronic form.
If you were keen on opening a demat account the first thing you should do is fill up the application forms. You would have to sign on the agreement papers which include the ‘specific’ PoA or Power of Attorney to the specific broker for all of the transfer of securities for the margin purposes. It also helps in the settlement of trades and other funds from the account of the client’s bank and recovers the amount that is due.
The power of the attorney carries to the bank along with all the details of the demat account and hence must be executed in the name of the broker and not by the name of the employees. One must therefore remember the basics of investing and look into the equity and long-term and short-term goals since it is a risky proposition.