As investors, we come across several investment funds, shares, ideas and companies, etc. One such transaction method is Demat and Trading Accounts. Certified Financial Planner Kuber Mindz Moneymindz says that Demat and Trading accounts are not complex things and one can easily know what they are.
Gone are those days when everything was done via paperwork. Today more and more work is done digitally. Computers and other gadgets do the work which was otherwise done manually. Technology has made life easier for mankind in this regard. Registration and transfers are now done electronically.
What is a Demat and Trading account?
Dematerialize account number or Demat account number enables electronic settlements of trades to occur. Each shareholder has an individual Dematerialize account to transact. A Trading account is an investment account containing stocks and securities, cash and other assets. Best Financial Advisor Kuber Mindz Moneymindz says that a Trading account is basically nothing but a day trader’s primary account who buys and sells assets frequently and as a result their accounts are subject to special management.
Trading accounts hold securities, cash and other assets just like brokerage accounts. But the distinction lies in the activity, purpose of that activity and risk involved. Day trading is the major activity of Trading accounts.
How do you explain Demat and Trading accounts in simple terms?
You have some money in your wallet. So you go to the nearby mall to buy essential groceries for the household. After checking the rates and finalizing everything, you take out your wallet to pay money. In this scenario, the wallet is the Demat account while you are the Trading account.
This is because a Demat account is a bank where shares are bought, deposited and sold (your wallet from where you take out money). A trading account is used to place buying and selling orders in the market.
Features of Demat and Trading accounts
- Prevent risks associated with paperwork
Having physical share certificates carries risks such as delay, wrong delivery, fire, robbery and mutilation and so on. Such problems can be avoided if done electronically.
- Instant transfer of securities
Its not a bundle of paperwork to physically transport from one place to another. Since that is electronic, it can be done with ease.
Merits of Demat and Trading accounts
- Safer option
Risks associated with paperwork aren’t feasible here since everything is done digitally.
- One account, several; equity and debt instruments
That’s right. You can operate multiple equity and debt instruments in a single Demat account.
For more information visit www.moneymindz.com or give a missed call to 022-62116588