Skip to main content

What is Demat & Trading Account..... 

What is a Dematerialisation (Demat) Account?

For open online demat account click here- Demat account

Demat is a short form of Dematerialisation. Dematerialization is the process of converting physical shares into electronic form.
A Demat account is an account that allows investors to hold their financial products in the electronic form. Having a Demat Account allows you to buy shares and store them safely. It is similar to a bank account in which you hold deposits with the bank and the record of debit/credit balances are maintained in a bank passbook. In the same way, when you purchase or sell shares, it will be credited or debited to/from your Demat Account respectively. It can be used to hold a variety of investments like equity shares, exchange traded funds, mutual funds, bonds, and government securities. You can open a Demat Account without possessing any shares and can maintain a zero balance in your account.

 


Why Demat Account?
For trade in stock market Demat Account is mandatory.
With a Demat account you can hold the certificates of all your financial products such as MUTUAL FUND, EXCHANGE TRADED FUND (ETFs), Shares and Bonds online.
In India only two depository CDSL and NSDL that approve a Demat account opening and hold shares in electronically.


CDSL-Central depository service limited.
NSDL-National securities depository limited.
Depository Participants (DPs):-
There is many banks and other broker known as depository participants (DPs) who act as intermediaries between the investor and the depository. They help you open the Demat Account...
What is a Trading Account?
A trading account is an interface that allows buying and selling of equity shares in a stock market. It acts as an interface between the investors’ bank and Demat accounts. Shares purchased through this account are credited to one’s Demat account. Sold shares are debited from the Demat account and sales proceeds are credited to the bank account. There is no restriction on the number of Demat accounts that an individual can avail.


How does a Trading Account work?
A trading account acts like a link between demat account and bank account of an investor. When an investor wants to buy shares, he places an order through his trading account. The said transaction goes for processing in the stock exchange. Upon execution, the required number of shares get credited into his demat account and a proportionate sum gets deducted from his the bank account.
A similar kind of process is followed in order to sell equity shares. The investor places a sale order for say 100 shares with the help of his trading account. It goes for processing in the relevant stock exchange. When the order is executed, the required number of shares are debited from his demat account and a proportionate sum gets credited to his bank account.

Documents Required for Demat & Trading account.
Proof of identity-PAN,voter ID,passport etc.
Address proof-Ration card, Bank passbook etc.
Passport size photo.
Proof of Income
Bank details.

Form-Online or Offline.

Comments

Post a Comment

Popular posts from this blog

What are hybrid mutual funds and how are they taxed?

What are hybrid mutual funds and how are they taxed? Every investor is different. There are some who like taking risks and enjoy the potential of high returns. On the other hand, there are some who are very conservative in terms of taking risks. They don’t mind the low returns as long as they are assured of capital security. Then there are those who are in the middle of the risk spectrum. They are not too aggressive neither too conservative. They look for moderate risks with moderate returns. To suit the investment preference of these different types of investors, mutual funds come in different variants. One such variant is the hybrid mutual fund which is suitable for moderate investors who lie in the middle of the risk spectrum. Let’s understand the concept of hybrid mutual funds and their tax implications – What are hybrid mutual funds? Hybrid funds are mutual funds which invest in both equity as well as debt instruments. The return potential of equity investment is adde...
Post a Comment
Read more

Basic of Mutual Fund......

MUTUAL FUND A mutual fund is a professionally managed  investment fund  that pools money from many investors to purchase  securities . A mutual fund is formed when capital collected from different investors is invested in company shares, stocks or bonds. Shared by thousands of investors (including you), a mutual fund is managed collectively to earn the highest possible returns. The person driving this investment vehicle is a professional fund manager. Mutual funds have become a very popular avenue for investment for many investors because of the benefits that they have. They allow investors market-linked returns, diversified risks through asset allocation, affordability through SIPs and ease of liquidity. Given these benefits and the potential of attractive returns, investors choose to invest their disposable savings in mutual funds. Mutual funds come in many different variants and when it comes to choosing the best fund, investors are often confuse...
Post a Comment
Read more

What is Conveyance Allowance......

Out of all the allowances given to the employees, Conveyance Allowance is, arguably, one that creates the most confusion. People are almost always puzzled about this. But why? Well, there are two reasons for that.  First , because conveyance allowance also gets referred to as transport allowance, a lot of companies use either of the names, which leaves employees wondering if the two are the same. And the  second  reason is that unlike most allowances which fall under the taxable or non-taxable brackets, transport allowance is partially taxable – may or may not be taxed. Now what that means is something we’ll explain to you in just a little while. What are Allowances? Allowances are fixed by the government; as such, employers are liable to pass on those benefits to the employees. By not paying attention to the benefits you’re entitled to and the full range of it, you might actually be helping your employer get away with unethical tax saving pr...
Post a Comment
Read more