Benefits of Demat Account

Posted on | By Divya Chauhan

The benefits of a Demat account are Easy to access online, Reduced risk of document loss, Preventing forgery, Nomination, Loan facility, storing various investments, global investment, No TDS on a Demat account, Timer saver, Cost-effective, and easy tracking.  There are several Benefits of the Demat Account to consider when looking at its positives and negatives.

Online Demat accounts have a number of advantages. They safeguard against Demat account fraud and forgeries, facilitate simpler transactions, permit quicker settlements, let you access loans, and protect your holdings from loss or damage. These benefits of dement accounts have led to their nearly complete replacement of paper-based trading in India. If you want to invest in the stock, it is best to fully understand the risks involved and to only open an online Demat account with a reputable broker.

Benefits of Demat Account | Advantages 

Let’s explore the main advantages of a Demat account

Simple online access

You can use your laptop or smartphone to access your Demat account whenever you want, from anywhere.

Reduced risk of document loss

 Physical bonds and shares carry a high risk of document loss. Even if a natural disaster forces you to relocate, the shares may end up lost. Because you can have a permanent digital record of your share, storing shares online is a much better and safe option.

Preventing forgery

 The risk of fraud is high when dealing with physical shares or bonds. However, managing paperless Demat accounts give you complete access to all relevant information and authentic data, preventing fraud or impersonation.

Nomination

A nomination facility is one of the evident advantages that according to the depository’s process is also provided by a Demat account. The designated nominee will be given ownership of the shares in the Demat account in the event of the investor’s passing.

Loan facility

 In addition to using it as a security deposit for your savings, the securities kept in your Demat account also allow you to access a number of bank loans. The securities may be committed as security for a loan from your bank.

Stores various investments

Besides the shares, a Demat account can also hold multiple assets. It can store a variety of things. like government securities, bonds, mutual funds, and exchange-traded funds.

Global investment

The growth of Demat accounts has greatly helped globalisation. Through these accounts, foreign investors are given simple access to the Indian stock market, which helps India’s economy.

No TDS on Demat securities

 TDS, or tax deduction at source, is one of the problems that taxpayers deal with, Nevertheless, The CBdt, or central board of direct taxes, has authorised a dispensation from TDS when a Demat account holder makes payments from his account. Your interest payments on bonds and securities are also not subject to TDS deductions. Make sure your securities are listed on NSE and BSE and saved in the Demat mode to qualify for TDS exemption.

Bonus stock split gets automatically updated

If the company whose shares you own decides to change their stock through a bonus issue or stock split. Your Demat account will automatically be updated.

Time saver

Using a Demat account saves very little time when buying and selling shares. As a result, in this scenario, share liquidity is simpler. On the other hand, moving actual shares involved a drawn-out procedure. Because the securities are stored in a dematerialized form, online transactions can be completed quickly.

Cost-effective – Cost-effective is another advantage you can take advantage of when opening a Demat account. It is a similar manner, opening a Demat account online can spare you from costs like stamp duty and other handling fees required for physical bonds. The only fee associated with a Demat account is brokerage. However, you will be able to save more money if you choose discount brokers.

Easy Tracking – There are no physical documents involved. It always makes it easier to keep track of each of them. As a result, you do not need to manually maintain a record. Along with the record of each investment, all of your paperwork is securely stored.

Thank you for reading this article. If you have any queries regarding our article on the Benefits of a Demat Account then do comment in the comment section below.

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Divya Chauhan
Divya Chauhan is an expert writer with 10+ years of experience as a content writer. They specialize in making complex topics like IT, Health, and general topic easy to understand. Divya has written over thousands of articles to help people with their content. Prior to joining Way2benefits’s editorial team in 2020, Divya worked as a Professor of BCA college and freelancer blogger.

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