Introducing Demat the treasury you’ll need for stock market
Demat accounts are like bank account in which we can hold a variety of securities to eliminate paper-based share certificate.
Demat account are used in India from 1996, so when we buy a stock from a stock exchange those shares dematerialises & then it is hold in the Demat account.
In Demat account we can hold a variety of securities such as
- ETF
- Equity Shares
- Mutual Funds
- Bonds
- Government Securities
- Debt Securities
In India if you want to invest in the stock market having a Demat account is mandatory. In India Demat account is handle by two organization National Securities Depository Limited (NSDL) & Central Depository Service Limited (CDSL)
Can we invest in Mutual Funds by using Demat Account?
Yes, we can invest in mutual funds by using Demat account. Mutual funds investment is one of the best ways to maximise return from market linked investments. Opening a Demat account for mutual funds is a great idea as a smart investor never keeps all his eggs in one basket, just like that we shouldn’t put all our money in a single investment instrument your investment portfolio should consists of a variety of assets like mutual funds, IPO, Bonds, Commodities, ETfs .
Demat account has its own benefits such as
- Invest & trade in multiple assets seamlessly
- Safely store all your investment digitally
- Faster transaction at a lower cost
- You can track & operate your mutual funds investment.
The key difference between Demat & Trading Account.
Demat full form is Dematerialized
In Demat account we store electronic certificates of our shares & other financial assets. Previously for trading there was a use of material certificate as a result the process was really slow. Digital certificate makes the process much faster.
A Trading account is used to buy & sell shares. Our trading account captures our transaction over a period of time like month or year.
Hence when a trading account is used for transaction a Demat account is used for storage.
Secrets that you need to know about Mutual Funds
A mutual funds offers its investors to put their money with other investors in an investment that is manage by a professional investment manager.
Mutual funds invest in variety of financial assets such as stocks, bonds & other securities according to each fund objectives.
Advantages of Mutual Funds
- Professional Managements – Mutual Funds give its investors a full-time professional manager who have the expertise, experience & resources to actively buy sell & monitor investments.
- Diversification – Mutual funds provides its Investors an easy way to diversify your investments across many securities. As a result, if one of the investment decreases in value there might be another investment in the portfolio that may increases in value.
- Affordability – For many people it might be impossible to purchase directly all of the security held by a certain mutual funds because it’s going to be costly. In contrast the minimum investment in most mutual funds is relatively cheaper.
- Liquidity – Mutual Funds allow its investors to sell their funds share any day when the stock markets are open so we have easy access to our money. When redeem the value of your share may be more or less than their original cost.
Types of Mutual Funds –
- Stock Funds
- Bond Funds
- Multi- Assets Funds