In the stock market, if you are planning to invest your funds, your first requirement is an account to trade. Now the investor thinks which account is mandatory to open for investment and trading?
What are the necessities for it? Can’t I invest without it? It might be possible that these queries arise in front of an investor before investment. This article is providing an answer to the queries related to investment accounts.
An important account for investment in various financial assets is an online demat account. If you enter into the stock market to buy and sell even for a short period of time- both demat and trading accounts are required.
With various service providers – from full suite to discount brokers – you have to know the different aspects related to the demat account and their utility.
Table of Contents
What is a Demat account?
The first question that you need to know is the concept of Demat. It is the requirement for online trading securities in the stock market. It is like a digital safe for your securities. Different brokers provide the online Demat account services at a low cost.
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You can open an account with any broker after analyzing the cost, activation time, support services, and other factors. Look for new types of demat service providers which provide subscription offers for a limited number of trades. For an expert level – you can look for a full-service demat account.
Which things are prime necessities for the account?
Just like a bank account, you need different documents for the activation of the account. After selecting a broker, you can initiate a process to open an account. The broker requires the following documents:
- ID proof: Voter card, Aadhar card, License, and Passport
- Bank details: Account details,
- Verification proof: PAN card
- Income details: Income statements for the past few months.
After registering with the broker, the KYC process is initiated. It verifies the credentials. The successful verification provides you with a unique client number that will help you trade in the stock market.
Do I need a Demat for every type of investment in the stock market?
If you are willing to invest in bonds and stock, then you can open a Demat account, but if you are willing to invest in mutual funds, then you invest with your bank account also. You can simply invest with the bank account-linked online payment portal.
Likewise, if you trade in margin-based instruments or in other words, you execute margin trading, you need a trading account in spite of a Demat account.
As an investor, if you have a Demat account, you can explore different securities in the stock market.
How can I select the best service provider for the Demat account?
The Demat account is necessary for intraday trading, but the main question is which demat provider should select to open an account. As a solution to this, you need to analyze different factors.
You need to compare the cost, initial expenses, minimum activation period, documents required, and service provided by the brokers.
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The broker that provides the best services at low brokerage and minimum activation time should select to open an account.
How can I add money to the Demat account for trading?
Unlike bank account-linked portals, you are required to have funds in the trading account. You can add funds to the wallet of Demat with the help of a payment gateway.
When you open your account, you can find the option “Add funds to wallet”. After clicking the option, you can add the funds to the account for the trading.
The above queries will help you in the smooth execution of transactions in the stock market.