Why is a Demat account in trading so essential?

<p>A Demat account is required to trade in shares electronically. This account holds securities in an electronic form and dematerialises them. Without a Demat account, an investor cannot trade in the stock market.<br></p><p id="isPasted">A Demat account has many advantages over investing in paper securities, making it the preferred choice for many investors as they recognise the importance of demat account.</p><p>"A Demat account holds your investments in an electronically-readable format."</p><p>The primary advantage of a Demat account is that it instantly transfers securities from one person to another without any paperwork.</p><p id="isPasted">This system reduces the chances of fraud and delays expected in the previous paper-based system, where certificates had to be physically moved around.</p><p>People are also in need of a demat account as they have to pay stamp duty on the transfer of securities, which is applicable in the case of physical certificates if the person has no demat account.</p>

<p id="isPasted"><strong>Key reasons why a Demat account is essential</strong></p><ul><li>Safety and security: It stores your investments like shares, bonds, and mutual funds in a digital format, which removes the risk of theft, loss, or damage associated with paper certificates.</li><li>Speed and efficiency: Trading is much faster as transactions are electronic and can be completed almost instantly. Shares are automatically credited to your account, and you can trade from anywhere with internet access.</li><li>Convenience: It offers a hassle-free way to manage your investments. You can monitor your portfolio, track performance, and even take digital loans against your securities through your Demat account.</li><li>Elimination of paperwork and costs: You avoid the costs and paperwork associated with physical certificates, such as stamp duties and mailing charges.</li><li>Mandatory for most trades: A Demat account is required to receive and hold shares that are bought in a market transaction. You cannot trade securities without one, and it is necessary for activities like applying for an IPO.</li><li>Automatic benefits: It ensures that benefits like stock splits, bonus shares, and dividends are credited directly to your account and linked bank account without any manual intervention. </li></ul>