Investments in the share market can help you generate exponential returns in the future if done well. Traders can build a diverse portfolio and enjoy high returns by investing in the share market. You will need an authorised trading account to get started in the share market.
As you become familiar with the intricacies of the share market, you might hold financial securities for higher returns. In such a case, a demat trading account is needed to facilitate this transaction. Both accounts are mandatory and have unique purposes for share market investors.
Read on to understand the role of dematerialisation and trading accounts for success in the share market.
Understanding the role of a trading account for investing in the share market
Opening a trading account is the first step to investing in the share market. A trading account allows you to buy or sell securities in the Indian stock market. A registered stockbroker in India can help you open a trading account. But before choosing any stockbroker in India, check for its registration with SEBI (Securities and Exchange Board of India). Many intraday traders (those who buy and sell securities on the same day) in India rely on trading accounts for share market transactions.
A trading account is mandatory to make transactions in the share market without any exceptions. Here are some merits of a trading account in India:
- A trading account allows you to trade in multiple exchanges, like National Stock Exchange and Bombay Stock Exchange.
- Investors can easily research financial securities with a trading account and make informed decisions. New-age trading platforms with research assistance have made it easy for investors in the share market.
- A trading account helps with the seamless purchase or sale of securities online. Transactions via a trading account are quick and secure.
- A trading account can be opened on any device to buy or sell financial securities. You can use your laptop, tablet, smartphone, or any other device for trading activities.
Understanding the role of Demat account for the share market investments
A dematerialisation account is the second step to becoming a successful share market trader. You might not always be an intraday trader in India. Traders wanting to hold financial securities will require an authorised Demat account. When you buy securities via a trading account, they are converted into electronic format and stored in the Demat account. You can hold shares, derivatives, and other financial securities in electronic format to enjoy higher returns.
Traders must open a demat account with an authorised Depository Participant (DP) in India. Here are some benefits of opening a Demat account in India:
- A demat account can safely store your financial securities for a given period.
- Since a Demat account stores securities in electronic format, it reduces the paperwork for investors. You do not have to carry physical certificates of different securities with a Demat account.
- Physical trading is tedious and might take a month. With a Demat account, traders can quickly transfer securities.
- A Demat account is a cost-effective solution for traders wanting to hold securities.
Final words
The best way to ensure success in the share market is to open a trading and Demat account in conjunction. You can open a Demat trading account with a reliable stockbroker in India. Once you open your trading account, you can start buying/selling securities right away!