Starting to invest in the financial markets is one important step, and opening a Demat account is another. It is a digital account where your investments, like stocks, mutual funds, bonds, etc., get stored electronically instead of as physical certificates. Such a mode of holding investments is meant for better asset tracking and management.
What is a Demat Account, and why do you need one?
A Demat account is a secure storage of a part of your securities, including shares, mutual funds, ETFs, and bonds, keeping them in electronic format so you don’t need to keep the physical certificates.
Thus, it minimises the risk of loss and usage of onboarding. It is not possible to buy or sell shares or bonds in a stock market without a Demat account.
Who Can Apply for Demat Accounts and What Docs Do You Need?
There are some eligibility criteria in terms of qualifications that you have to fulfil to do so. In short, an adult must be at least 18 years old and must have suitable documents. Here is a brief description of those documents:
- PAN card: Must have
- Aadhaar card or any government-approved ID
- A photocopy of address proof (like a utility bill or a passport)
- Bank account proof (a cancelled cheque or bank statement)
- In case you are an NRI, you may require some additional documents.
Step-by-Step Method of Opening a Demat Account
Have a look at how to open an account:
- Select a Depository Participant (DP)
A DP stands for an intermediary who will run your Demat account. Extensive numbers of apps for financial services integrate services for Demat accounts.
- Fill Up an Application
Most probably, you have to fill in pretty basic texts with your personal information and interests, like your name, mobile number, and email.
- Upload Your Documents
Upload scanned copies of your PAN card, address proof, and signature. Most apps allow this step to be completed through e-KYC (Aadhaar binding verification), thus even further improving this time-saving process.
- Link Your Bank Account
Connect your bank account so that funds may be required for hassle-free transactions to investments.
- KYC and Verification of Documents
You may have to select an e-signature procedure after uploading documents at this stage; also, some may require you to verify your identity via OTP.
Activate Account
Your Demat account will get activated once the verification process is done for them; this can take hours or days depending on the platform. Through applications like Bajaj Broking: Demat, MF, and SIP, the process is going to be fully digitised, which is why it’s going to reduce time consumption.
Link a Trading Account
A Demat Account features securities held in it, while a Trading Account offers access to the purchase and sale of securities. Platforms provide both services, and creating a link between both accounts ensures smooth movement of your funds from your bank account to other bank accounts, your Demat account, and your trading account.
Funding Investment into Your Demat Account
Your account is configured, and now you have to move some funds to invest with. One of the simplest methods to do this would be to connect your bank account with your trading account and use that one to directly buy any stock, bond, or mutual fund via the app.
Your checking balance can also be further explored, as well as your available securities and real-time investments, with all these apps.
Place Your First Investment Order
With the funds available, you can now decide what form of investment you want, such as stocks, mutual funds, or any other securities, choose their respective quantity, and place your buy order. Normally, this type of order also features advanced order execution, i.e., limit order, stop-loss option, and SIP investment choices.
Monitoring and Managing Investments
After you’ve invested, the progress of that investment can be tracked from your Demat account. The remarks display the report of the holdings, dividends, corporate actions, and progress in the market.
Check these reports from time to time so you can follow the progress of your investment and make changes whenever necessary.
Final Take
Opening a Demat account is the first step in such investment. This, thanks to digitising platforms and mobile applications, has now become the fastest and easiest.
