A Demat account acts like a safe deposit box but for your investments in financial instruments like stocks, mutual funds, Exchange Traded Funds (ETFs), and bonds. Instead of physical certificates, these holdings are stored electronically. Here's a breakdown of its key features:
Account type: Used for trading and holding financial securities.
Benefits:
Convenience: Easy to buy, sell, and hold investments in one place.
Safety: Eliminates the risk of losing physical certificates.
Transparency: Real-time tracking of holdings and transactions.
How it works:
You open a demat account with a depository participant (DP) like a bank or brokerage firm.
Once linked to your trading account, you can buy and sell securities through the DP's platform.
Purchased securities are electronically deposited into your demat account.
