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Difference Between Demat and Trading Account | Motilal Oswal

Have you ever thought of investing in the stock market? If yes, you must also be aware of the requirements to invest money in the stock exchange. One of the most important and mandatory requirements for investors is to have a trading account and a Demat account. Even a number of novice traders have a lot of confusion about Demat accounts and trading accounts. Trading and Demat accounts may confuse you as they are typically linked accounts.

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Difference Between Demat and Trading Account | Motilal Oswal

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  1. Difference Between Dematand Trading Account Introduction Difference between Dematand trading account

  2. Introduction • A Demat account is used to hold your stocks, including share certificates and other documentation, in electronic format, whilst a Trading account is used to buy and sell these assets on the stock market. This is the main distinction between a Demat account and a Trading account. • However providing different functions, trading accounts and Demataccounts are closely related. In actuality, your trading account, Demataccount, and bank account all closely interact to determine your actual stock market activity. In the language of the stock market, the combination of a trading and a Demataccount is referred to as a "2-in-1 account."

  3. Following are the difference between demat and trading account • Difference between the nature of Demat & Trading accounts A Demat account keeps the holding of shares and other securities at a specific point in time, whereas a Trading account records your capital market transactions over time. As a result, a trading account is in the nature of a flow of transactions over time, whereas a Demataccount truly reflects the effect of your wealth at a single point in time. • Differences in the Function of a Trading Account vs a Demat Account A Demat account has the benefit of preserving financial assets like securities and shares. Re-materialization, or the transformation of securities from their electronic form into their physical form, is another function of the Demat account. Using a trading account, this act of selling and buying securities is carried out effectively. The same can be done with a trading account if the trader just wants to deal in currency, options, or futures. However, both Demat and trading accounts are required if the trader wants to trade equities. Demat accounts are essential for equity holdings in particular since they securely store securities.

  4. The Difference in the Charges of Demat account and Trading account: A user may use one PAN card to access an unlimited number of trading accounts or depository accounts. With the same or a separate broker, one may have multiple trading or Demat accounts. Investors who choose to maintain several Demat accounts must pay annual maintenance fees for each account they maintain, even if the accounts are not being used. Along with the AMC fees, the account holder is also responsible for the custodian fees and transaction fees. There would be no further costs beyond those incurred on starting the account if the investor only had one trading account.

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