India now ranks 9th globally with over 17 crore active Demat accounts. Still:
If you are one of those 87%, then you may never be rich. People are slowly realising this, and stock market participation is rising! So far, in 2024, 3.18 crore new accounts have been opened, surpassing last year's total. This article discusses why you should get a Demat account immediately, its benefits, and how you can choose one that fits you best!
Gold and Fixed Deposits (FDs) may seem safe investment options. However, if you do not invest in the stock market, you may be missing out on 200% returns. In the past 6 months, various stocks and indices have given returns ranging from 14% to 277%.
Lately, people have started recognising the stock market's potential. The number of Demat accounts is rising in lakhs, going from 39 lakh in FY2013-14 to 399 lakh in FY2023-24. The infographic below shows the rise in the number of Demat accounts for the past 10 years. However, only about 3% of Indians participate in the stock market.
There are many reasons to open a demat account. If the growing number of Demat accounts and potential returns don't convince you, here's another fact that might!
Did you know that you are essentially losing money on FDs and endowment plans? These instruments only generate about 4-6% returns. Considering inflation, you could lose over ₹14 lakh on an investment of ₹50 lakh in 10 years!
That's why you need a Demat account today; to take advantage of the stock market and grow your wealth. Before you open a Demat account, there are certain things you must know, such as what a Demat account is and the advantages it provides.
However, choosing one can be quite difficult with so many different options out there. But worry not! At Finology Select, you’ll find the top brokers with their features, benefits, comparisons and everything else you need to make the right choice.
It is short for "dematerialised account”. Think of it as a digital bank account for your investments. You need one to buy/sell stocks. Like a bank account keeps your money safe, a Demat account keeps your stocks and securities safe in a digital format.
Initially, shares were held in the form of physical certificates, which were prone to loss, damage, or theft. A Demat account is the solution to these problems.
Now, if you want to open a Demat account, you need to approach a Depository Participant (DP). It may be a bank, Financial Institution (FI), or stockbroker registered with depositories like the National Securities Depository Limited (NSDL) or the Central Depository Services Limited (CDSL). It is similar to a middleman between you and the depository. When you buy or sell shares, the DP manages the flow by crediting or debiting your Demat account. It makes sure that you retain ownership of your shares.
Opening a Demat account comes with numerous advantages:
FDs can earn an interest between 3.50% - 7.80%. However, in 2023, Nifty 50 gave 20% returns, and Sensex gave over 18% returns. Without a Demat account, you will be stuck with meagre returns and will never be able to create wealth.
Here's a simple step-by-step guide to opening a Demat account:
4. KYC Verification: The DP carries out this step, ensuring compliance with regulatory requirements
The Demat account opening process may vary from broker to broker. Finology Select provides detailed guides on how to open a Demat account with 20+ brokers with images, simplifying the entire process.
Here is a list of some of the most prominent brokers in India:
Compare their various offerings, features and charges and those of 15 more brokers on Finology Select! But what to do if you have already chosen a broker and want to switch? Well, you can change brokers easily!
There are multiple reasons to transfer shares from one Demat account to another. It may be to switch to a broker offering better services or lower fees or simply move your shares to a family member's account. It can be done in two ways:
Step 1: Ask your current broker for a Delivery Instruction Slip (DIS), it contains all the necessary details needed for the transfer.
Step 2: Fill in the following details:
Step 3: Sign the document and give it to your current broker.
Step 4: Investors may need to pay a fee for the transfer.
Step 4: Collect the acknowledgement slip.
Consequently, the shares will be transferred within 3-5 days.
Step 1: Visit the CDSL or NSDL website and sign up for the ‘Easiest’ or ‘Speed-e’ facility.
Step 2: Fill in all the required details and submit the form.
Step 3: Provide a copy of the form to your DP, which will then send it to the central depository.
Step 4: Relevant authorities will verify your information, and you will receive your login details within 1 to 2 days.
Now, you can transfer stocks from your demat account whenever you want.
Nearly 3.10 crore fresh Demat accounts were opened in 2023 and 3.18 crore in 2024. Having a Demat account has become a necessity for wealth creation. Without a Demat account, you can’t invest in the stock market or earn high returns.
More investors are recognising how important a Demat account is to their investment strategy.The financial markets are now almost completely digital, and in this scenario, having a reliable platform to find broker information can help your investment experience.
Opening a Demat account may be a complex procedure, but it does not have to be difficult. With the right guide, like Finology Select, it's as easy as pie.
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