The stock market is one of the many potential places to invest your funds. Investing in the stock market is often risk, but it also offer plenty of high returns. With the right management and planning, you can take advantage of the stock market to secure your financial position and earn an income.
But in order to do so, you will need to open a demat account. But what is a demat account? This account is like a bank account that will hold your stocks and shared. Any shares and securities you purchase or sell are held in a dematerialized form in this account. As of now, it is mandatory for you to open a demat account, in order to carry out any transactions in the stock market. Once you have opened the account, you can easily purchase or sell your shares as required.
Given below are some of the FAQ’s and their respective answers about the demat account:
How to open a demat account?
Know you know what is a demat account, you now need to know how to open it. In order to open a demat account, you would first need to get in touch with the registered depository participant. This entity functions like a bank or broker. In order to get the list of registered DP’s you can check online. Once you access their website, you can easily download or collect an account opening form from the office or website. Once you fill out the form and submit it, it will usually take a week or two for you to open the account. Ensure that you add a nominee when doing so.
What are the charges that are levied on the demat account?
In most cases, the account opening charges will vary from institute to institute. Certain private banks do not charge an opening fee, while others may do so. However, certain institutes do offer a refundable fee. The other types of fee charged include annual maintenance free, custodian fee and transaction fee.
What is a depository?
The depository is an organization that is charged to hold securities such as your shares, debentures, bonds, government securities, and mutual funds amongst many others. It holds your shares and stocks in an electronic form. The securities are held at the request of the investors through a registered Depository Participant. This DP will also provide services related to the transactions in securities.
What is dematerialisation?
Dematerialisation is the process wherein which, the physical certificates of your investments are converted into an electrical form. It is then credited into the account that is held with your DP.
Can you open multiple demat accounts?
You can open several accounts under the same name, or with different depository participants. However, you will need to fill the KYC form for every account you will need to open. You will also need to submit certain set of documents pertaining to the KYC form that includes your proof of identity, address and PAN card.