A common new year’s resolution that we all have is that we want to get rich. And we don’t want to wait for decades like Warren Buffett to create wealth. We all want to get rich quickly. And what place is better for getting rich than the stock market?
We have witnessed the magic of the stock market with our own eyes. In the last one year, the Nifty 50 Index has registered a 24.13% increase. What other investment option would generate similar returns? The answer is nothing but the stock market. And the first step to stock market riches is to open a demat account.
In 2021, retail investors became obsessed with the stock market. This is evident from the meteoric rise in the number of demat accounts opened in India. As of November 2021, there are around 7.4 crore demat accounts in India (including both NSDL and CDSL). This is a mammoth increase from the 3.6 crore demat accounts in 2018-19. So, it’s safe to say that retail investors have accepted the idea that opening a demat account is like buying a lottery ticket. It is their entryway to the humongous wealth offered by the stock markets.
But only if things were this easy. You see, despite the encouraging Demat numbers, the lack of financial literacy in India is startling. A majority of investors have no idea how the stock market works or what is a Demat account. I bet most of them will not even know the difference between a Demat account and a trading account. They wouldn’t even know that a Demat account is not just for their shares. Or that there is more than one type of Demat accounts.
This is why it is really important that retail investors spend time understanding the basics of the stock market, starting with a Demat account. I mean, how will you win a lottery, without buying a lottery ticket?
In the simplest form, a Demat account is an electronic locker. It is like a bank account that you open with a broker. This account helps you store not just your shares but other assets like bonds, mutual funds, ETFs, gold bonds, ULIPs etc.
Stock market beginners must also understand that a Demat account is not the same as a trading account. You can only store your assets in a Demat account. If you want to buy and sell these assets, then opening a trading account is a must.
- Demat account – To store assets
- Trading account – To buy and sell assets
Do you know that even NRIs can invest in the Indian stock markets? Yes, even NRIs can open a Demat account but not the normal kind. There are three types of Demat accounts in India –
- Standard Demat account for resident Indians.
- Repatriable Demat account for NRIs with NRE bank account
- Non Repatriable Demat account for NRIs with NRO bank account.
The type of Demat account you need is dependent on your residential status. But irrespective of that, a Demat account is a must if you want to participate in the Indian stock markets. Apart from the regulatory aspect, there are various other advantages to opening a Demat account. These include –
- One-stop storage for all your financial assets.
- Quick settlement of trade. Do you know that before Demat accounts, the settlement cycle was 14 days long.? This has reduced to trading + 2 days now.
- There is no longer any storage, misplacement or risk of theft associated with physical shares.
- Demat accounts have also eliminated bad or vanda trades from the market.
- With a Demat account, you can buy and sell even one share, which was not possible before when you had to trade in lots.
Before the technological revolution and a phone or internet connection in every corner of the country, opening a Demat account was truly a tedious process. Imagine signing 50-80 pages of contract with the broker, then standing in a long queue to submit these forms… only for them to get rejected for some random reason.
But things have changed and for the better. Today, opening a Demat account is really simple and paperless. But it is really critical to decide who you want to open a Demat account with. You see, not every broker will provide a technologically advanced trading portal or high margins whilst charging low brokerage… except for the best stock broker in India, Samco Securities. Here are a few perks of opening a Demat account with India’s best broker – Samco Securities.
- Lowest brokerage structure in India – Flat Rs 20 or 0.02% whichever is lower.
- High Intraday trading margin
- Expert technical and fundamental ideas during market hours.
- Advanced real-time trading platform, tools and software.
- Warrior-like support team at your back
- Opening a Demat account with Samco takes literally less than 15 minutes and it’s all paperless.
Oftentimes, it’s not enough to just take the right step. Hence opening a Demat account might not be your ticket to stock market riches. You also need to learn to segregate the noise from the market news. For every Rakesh Jhunjhunwala, there are thousands who relied on hot tips and lost their money in the market. Hence, the best way to manoeuvre the crazy market ups and downs is to focus on a single voice of reason like Samco Stock Market Library.
In the new year, let’s vow to make smarter financial decisions together… You and Samco Securities… Best Stock Broker in India