When you set out to look at investment opportunities to accumulate wealth, chances are high that you may come across demat account services. Usually, financial services companies and banks promote demat accounts. Demat accounts are required for investing in the capital markets. But did you know that it opens doors to several opportunities for investors who are really looking forward to earn good money in the investment markets.
Demat account is needed for storage of dematerialised shares that you buy or sell in the investment markets. An online demat account stores your shares or financial instruments in electronic format for trading in the exchanges.
If you are starting out to become a serious investor, here is a list of some of the markets that you can venture in to with your demat account.
1. Equity and Derivatives
Start as a stock market investor. Study the market and learn trading strategies by investing small amounts of money. A demat account is all that you need to become a share trader. Be it long-term or short-term investment goals, equity markets are a great place for all kinds of investors.
2. Commodity Derivatives
Trade in the primary good markets and diversify your investment portfolio. Buy goods at current rates and use futures contracts to sell those commodities by forecasting profitable returns at a specific time in the future.
3. Currency Trading
Use your demat account to buy and sell currencies at the currency exchanges in India to earn from the fluctuating currency rates. With the right set of strategies, currency trading can lead to good returns at the currency exchange.
Invest in a private company that is going public by buying shares through IPO openings. If you have a good investment appetite with long-term goals then IPO investments in promising companies can yield lucrative returns with time.
Dematerialising your physical shares
Whether you had been into trading in the share market long ago or you received physical share certificates in inheritance, it’s time for you to dematerialise your shares and move them to an online demat account.
Unlike the age-old method of buying and selling physical shares, an online demat account has several benefits. Some of them are:
· Selling physical shares requires paper work and consumes time that can lead to losing the time-bound trading opportunity. Online demat account lets you trade instantly.
· You don’t have to follow-up with market advisors or friends for market updates again and again. A reputed demat service provider empowers you with the tools to monitor the performance of your shares and gives your expert tips from time to time.
· You do not have to go anywhere to buy or sell shares. An online demat account lets you trade online on your desktop, laptop or handheld device. Leading demat account providers such as Tradebulls offer their clients with desktop-based and app-based account management solutions along with the demat account.
The central depository stores the securities held by investors who are clients of the depository participants. To become a Depository Participant (DP), a bank/broker/financial institution will need to be registered with either of the central depositories, NSDL or CDSL.
Founded in 1996, National Securities Depository Limited (NSDL) is a Mumbai-based central depository for securities. NSDL was the first electronic depository services provider in India. On an average, 3713 accounts are opened each day at NSDL.
Also, located in Mumbai, Central Depository Services Ltd. (CDSL) was the second central depository for securities that was established in 1999. Currently, CDSL has a huge network of DPs with operation from over 17000 sites across India.
Find out more about demat and the role of depository participants by watching this video by moneycontrol.com - https://www.youtube.com/watch?v=MCPCZd4eJzQ
Benefits offered by Central Depositories
· They eliminate bad deliveries of securities.
· They initiate and roll-out data security features to safeguard the enormous data stored related to securities that move in and out of the system.
· The DPs are audited by the depositories on a regular basis to ensure that various compliance standards and best practices are followed by them.
· They set the charges that allow DPs to offer competitive rates to investors.
· Central Depositories provide technology support to DPs in case of any technical issues at the DPs location.
· Since the shares are in dematerialised formats, the investor no longer has to pay higher charges that came with physical certificates.
· These depositories were created for bringing more convenience to investors. Today, investors can manage their demat account and trading online with less paperwork. The DPs also enjoy the benefits of managing clients effectively and of delivering better service with the digital empowerment offered by the central depositories.
Online trading with a demat account
With technology, opening a demat account has become hassle-free and nearly paperless. Leading financial institutions who are depository participants with NSDL and/or CDSL are providing demat account services at competitive rates with value-added services in India.
Reputed service providers provide a robust proprietary online trading platform with expert advice and apps for trading in various markets on the move. The account is linked to your bank account for immediate trading actions that lets you grab trading opportunities on time.
While a demat account can be great for trading in various markets, the earnings depend on the risk factors that impact the specific markets. Smart investors learn the tactics and use strategies before putting their feet completely in any investment market. For getting better at investments, seek advice from financial experts of your investment firm and practice trading with small amounts till you are really good at it.
Now, that you know the opportunities and benefits of opening a demat account, why not go ahead and get one to start trading. You can easily open a demat account with Tradebulls, a trusted demat account service provider in India with membership in several exchanges for catering to the needs of amateur as well as expert investors.
To open a demat account and to learn more about online trading you can visit https://www.tradebulls.in/online-trading
Do you still need more information about the potential of a demat account? Post your queries in the comments area for further discussion.