Demat accounts have actually brought a full-fledged revolution in the manner investment management is conducted in the financial world. Many new to the term ask what is demat account. It is simply the digital facility that allows an investor to store his shares and securities in electronic form. Most people know the fundamental characteristics of Demat accounts, though there are certain lesser-known benefits that truly differentiate them.
- Consolidation of Investment: A demat account keeps all your investments at one point. This involves stocks, bonds, mutual funds, or even government securities. It becomes very easy for a portfolio, while the view of financial assets will be integrated, without any hassle.
- Corporate Advantages: It gets credited to your Demat account at the time of issuing dividends, bonus shares, or rights issues by the company. Therefore, you do not require physical certificates and documents and never go out of corporate benefits.
- Easy Portfolio Transfer: The Demat account makes the process of a hassle-free transfer of your securities from one brokerage service to another. It is a digital format that eases the transfers and the speed of these transfers is facilitated by the fact that there is no physical handling of documents.
- Protection Against Loss and Damage: Share certificates tend to be lost, stolen, or damaged over time. A Demat account keeps your holdings in digital form thereby obviating such risks altogether. This also reduces the instances of forgery or fraud, which provides relief to the investor.
- Loan Against Securities: An unexpected but key aspect of a Demat account is wherein an individual may keep their securities pledged so that these assets may be later used as collateral for obtaining a loan. Thus, shareholders can gain extra financial leverage during a tough time by selling their holdings and requesting loans.
- Nomination Facility: Demat accounts provide a nomination facility. Through this facility, the account holders can nominate their nominee who, in case of untimely events, would get your holdings. Thus, your loved ones will be able to acquire your assets without legal hassle.
- Fractional Shareholding: Though fractional shareholding is not very common with physical shares; it is very easily manageable in Demat accounts. This is quite useful for mutual fund and ETF investors where fractional ownership is the norm.
- Real-time Updates: The demat account brings real-time updates on investments through corporate actions, price changes, and portfolio value. It will help the investors to make time-bound decisions according to the movements of the market.
- Environmentally Friendly: It reduces the usage of much paper by converting from physical certificates to being stored digitally; hence, Demat accounts is an eco-friendly investment platform. Therefore, it keeps the transaction sustainable and easy.
- Varied international investments: Demat accounts give the chance to invest in the markets of the world. This avenue helps an investor not only to diversify their portfolio but, above all, invest in foreign stocks and other securities. In that way, it is a good source of investment outside one’s country to tap into international markets.
All such hidden benefits make it a multi-faceted utility tool for a modern investor. Irrespective of whether you are a beginner or an experienced investor, taking time out to check these hidden treasures will help unlock all the benefits associated with your journey in the share market investment. It is possible to bring maximum returns to your account and take financial planning to another level by exploring such uncommon features on your Demat account.