An account that allowed electronic delivery of shares from the seller to the buyer’s Demat Account was called a Demat Account. It eliminated the requirement of physical share certificates and the risk associated with it like loss, theft, and forgery. In today’s world, companies offer a free Demat Account so as to lure customers. However, here are some advantages and disadvantages that are essential to know before signing up for a free Demat Account.
A free Demat account comes with various benefits like free lifetime annual maintenance, no hidden cost or paperwork, trading is allowed in NSE and BSE exchanges only, easy transfer of funds through NEFT/RTGS/IMPS etc. There can be disadvantages too like the maintenance fee will have to be paid for each quarter as it is non-waivable, Demat charges are applicable on delivery of shares equal to 0.5% (with a minimum of Rs.10), no 3-in-1 service available, charges on short sell transactions and so on. Free demat and trading account come with great benefits; however before handing over your hard earned cash to anyone, it is essential to check out the advantages and disadvantages of the same.
The biggest benefit of availing the free demat account is that the trader or investor need not pay any account maintenance charges. However, other aspects like brokerage and transaction fees are identical to a normal demat account. Hence, traders and investors get the benefit of operating without any charges and without having to worry about the risk of fraudulence in paper trading.
All brokerage houses are involved in providing free Demat Account. However, the free account comes with its own set of pros and cons. Here are some important factors of a free demat account.
Even though you do not have to pay anything to open a Demat account, the free Demat account providers may charge the traded amount and trading fees. A certain amount like brokerage is usually charged by these companies and the charges are incorporated in running a company.
Demat account is essential for the trading of shares and securities. With a Demat account, shares can be held in electronic form before transferring it to the buyer's Demat account after the conclusion of the transaction. It offers a secure way to store your shares.
Having a Demat account is crucial while investing in stocks and securities as it is the only way to hold electronic records of your investments. Anyone wanting to trade and invest in stocks, mutual funds, exchange-traded funds, bonds, government securities and other market instruments must have a Demat account.
Advantages of opening a trading account: Easy to open: A trading account can be opened in 2 working days with the necessary documents and digital signatures by a person above 18 years of age. With specific digital signatures like Aadhar, PAN and OTP on mobile, coupled with e-KYC, an online Demat account can be opened in a matter of 20 minutes and use stock trading account software.
This demat account can give you the liberty to invest in the stock market, buy and sell shares, settle mutual funds investments automatically, and instantly transfer shares and securities into your home account.
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