Demat VS Trading Account Demat Account & Trading Account tend to cause confusion most of the times. But it is important to know that they both are different but required by investors and traders. There are a lot of opportunities offered by the stock market for wealth creation. Investment should be an vital part of everyone’s life. It is important to investment to fulfil long-term financial goals. To being investing in the stock markets, a Demat and trading account needs to be opened. Both Demat and Trading accounts perform different functions but it is mandatory to have both these accounts. Dematerialization Account A Dematerialization Account, commonly called a Demat account, is an account that hold shares of a company in a digital format. It can also be used to dematerialize shares of companies listed on the stock exchanges. It converts shares from physical format to digital format. A Demat account can be opened with a zero balance, that is, no shares need to be owned to open a demat account. The working of a Demat account is similar to that of a bank account. The bank account is for money transactions while the Demat account keeps a record of the sale and purchases of stocks. A number of investment types like equity shares, bonds, government securities, mutual funds, etc can be maintained in a Demat account. Trading Account An investor or trader can open a Trading account with a registered stockbroker. Trading acts as a link between your Demat account and Bank account. While shares in an electronic form are maintained in a Demat account, one needs to have a trading account to carry out transactions. When shares are purchased, the order is placed through the trading account. The transaction will be processed by the stock exchange, the amount for the shares purchased will be deducted from the bank account linked to the trading account and the said shares will get credited and reflect in the Demat account. Demat Account VS Trading Account
People often confuse the two types of accounts required to invest in the stock markets. But they serve two entirely different purposes and are complimentary to each other. On purchasing shares, the money gets debited from the trading account. But the shares are stored in the Demat account in an electronic format. Differences between Demat and Trading account: Demat Account Trading Account A Demat account is an account which A Trading account is used for the transaction of stores the shares in the digital format. stocks and captures the flow of trades (buying or selling). Shares and securities are stored digitally A trading account withdraws money from the in a Demat account. linked bank account to buy shares and deposits money when shares are sold. An annual maintenance fee is charged. Maintaining a trading account does not involve any cost. A Demat account holds financial Trading account is an account to trade financial instruments. instruments. A Demat account reduces the risk of a A trading account takes time in the settlement delayed settlement because it is done in a because it is done over a while. short period of time. Easy Steps To Open a Demat Account? Here are some of the steps to open a Demat account: 1. Nirmal Bang simplifies the account opening process for investors. An account opening form has to be filled. 2. Copies of required documents, a passport-size photo and a PAN Card copy are to be submitted to Nirmal Bang. 3. An in-person verification would be carried out. A Nirmal Bang Representative would contact you to verify the details provided in the account opening form. 4. Once the application is approved, Nirmal Bang will provide you with a Demat account and a client ID.
A Demat account is rightly deemed as the virtual identity of an investor with regards to the financial assets held. The trading account is the transactional identity for trading in the stock market. An investor/ trader is required to hold both these accounts to invest/ trade in the stock markets. Just contact a representative of a leading stock broking firm like Nirmal Bang and be ready to be led to a smooth account opening process.