Personal Finance

5 Myths of a Demat Account you Should Stop Believing

New players and budding traders in the industry hear a lot about the free Demat Account opening process and its functions. Everyone will come up to you with their version of the experience that they have had while trading and using the account. Most people tend to believe these individual opinions rather than analysing the facts and ideas that prevail in the market. The first thing you need to know is that these opinions do not depend upon the facility as a whole, but the experiences that people had with their service provider. So, if someone is telling you that the free Demat Account opening process is not convenient or reliable, they are explaining about their service provider!

Therefore, the best thing you can do is make your stance as a well-informed individual. There are many myths about the Demat Account that you need to avoid and stop believing now before it is too late! Also, open your account by availing the best Demat Account service that you can find in your city. And to get complete details and information regarding the same, click here.

Book Q & A

Addressing the myths and confusions regarding Demat Accounts is better than believing whatever is served!

5 Common Myths Related To Free Demat Accounts

There are no limitations and boundaries to the myths regarding the free Demat Account opening that prevails in the market. However, there are a few common ones that most of the traders tend to believe given the emphasis people put on them. Your task is to know these myths, identify the facts and avoid them to the best of your possibility by finding the best DP (Depository Participant).

#Myth 1: Demat Accounts Can Only Hold Shares

Yes, most people would tell you that free Demat Account opening is only for holding share certificates. However, you can hold almost all types of stock trading assets and investments like ETFs (Exchange Traded Funds), government and money market securities, bonds, mutual funds, etc. Demat Accounts are multi-purpose and multifunctional that you can use for most of your investments. The quality of this facility will depend upon the Depository Participant as there are many in the market.

#Myth 2: Demat Accounts Have An Expiry Date

NO, Demat Accounts do not come with an expiry date. After completing your free Demat Account opening process, all you have to do is maintain it well and pay the AMC (Annual Maintenance Charges) and other charges. However, the alternate option is possible. That is if you are not actively participating in the share market or do not use the account for a while, you can freeze it to secure your existing certificates. You can consult with your Depository Participant and get the details related to this process.

#Myth 3: Demat Accounts Are Not Safe

The free Demat Account opening process is as safe as the functioning itself. The dematerialisation process and secure. You can store all your shareholdings electronically and reduce the risks related to handling the documents physically. If your Depository Participant is reliable, well-known and offers good services, you can completely depend upon the services. The fact that you cannot trade without the help of these accounts and trading accounts will bound you for having one. Therefore, you should choose your trading partner carefully.

#Myth 4: Demat Accounts Facilitate Trade

The most common and popularly preached myth is that the free Demat Account opening process will allow you to trade in trade exchanges like NSE (National Stock Exchange) and BSE (Bombay Stock Exchange). However, you need to link three accounts together for doing so. You will need to have a Demat Account and trading account and then link both with your general savings account. All these three accounts will work in coordination to help you trade online without having to take the help of brokers.

#Myth 5: There Can Only Be One Account Per Trader

You can go through several free Demat Account opening processes either with one Depository Participant or with different ones if you want to. This choice highly depends upon the traders and the type of investment flow they want to go with! So, if you want to participate in the trading process actively, you may choose to have several accounts while choosing to have only one if it is occasional. The choice is individually yours, and you must make your decision as per your trading activities. However, you can also consider consulting with your Depository Participant to end up with a choice in this case.

All the myths that you have read about are a consequence of the experience that traders had by choosing the wrong services. Most of the unsatisfactory comments do not have any factual ground! Such myths are common in stock markets and you will face such conflicting opinions without taking any risk. Therefore, the best you can do is analyse your options and choose the Depository Participant that you find the most reliable one.

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