Difference Between Demat And Trading Account
Stock market provides ‘n’ number of opportunities for wealth creation. You may be a doctor, engineer, teacher, manager or even a college goer. Whatever your profession or status be, investment has to become part and parcel of your life. You may think that you are earning a lot and living a luxurious life, so what is the need to invest? But there may be unforeseen expenses in the future like medical emergency, sudden loss or post retirement expenses. How will you face all these if you don’t have any back up plan? So you should have proper financial planning as per your needs and goals. Once you have a plan in place, what’s next? You need demat, trading and bank account to start your investments in the stock market. Your bank account has to be linked with the trading account so as to buy or sell shares. In this section, let us learn about the difference between demat and trading account.
What is demat and trading account?
Dematerialized account or demat account is used to hold shares in electronic format. Dematerialization is the process of converting physical shares into electronic shares. Physical shares have their own set of drawbacks as they may get torn, lost or stolen. Transfer of shares also took a long time as the process involved a lot of paper work. Dematerialized shares can be maintained easily and are stored in a safe manner. You can open demat account online easily by clicking the link https://ekyc.karvykra.com/ksbl-ekyc-new/ . It’s a simple and easy process and will take only 15 minutes. To fill the account opening form, you need to have PAN card, AADHAAR, personalized cheque, bank statement and signature signed on white background.
Are you confused about demat and trading account? Lets us learn about trading account now. When you buy or sell a share, your money from the bank account gets transferred to your trading account. Only with a trading account, you can do any transaction in the stock market.
What is the difference between demat account and trading account?
Let us understand this with an example. You buy shares of ABC company for Rs. 1000 at Rs. 100 per share. As the bank account is linked with the trading account, Rs. 1000 gets debited from your trading account when you buy the shares and the same amount is credited to your trading account when you sell these shares. The shares you purchase get credited to your demat account and it gets debited from demat account when you sell the shares. Trading account acts as an intermediary between bank account and demat account.
When you open a demat account online, simultaneously your trading account too gets opened. You get a user id and password by using which you can begin investing through your trading account. Hope you got the point. Demat account just holds your shares in electronic format whereas to do buy or sell transactions, you need a trading account.