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What is Demat and Trading Account - All About demat account And Trading Account - How To open demat Account free

What is Demat and Trading Account

Today we will know about Demat account and Trading account : what is demat account & How to open demat account. And what is trading account & How to open trading account.

Demat And Trading Account


    DEMAT ACCOUNT

    Demat account is used to buy or sell shares of any company. Just like people keep their money in a bank account, shares are kept in a demat account.

    whenever we withdraw money from our bank account, we get it in physical form.  But as long as they are in the bank, it is a digital currency.  Whenever we make a payment from a debit card, we also use a form of digital payment ie electronic money transfer.  Similarly, when we have shares in Demat account, we can digitally transfer them to another person's Demat account.  In such a situation, we do not need to keep the shares in physical form.

    In other words, the facility of digitally holding shares electronically is called demat.  The full name of Demat is Dematerialize.  The process of converting securities into physical form is called dematerialization.  

    As I said earlier, whenever you used to buy a share in the old times, the company used to send you documents related to that share.  It was proof that you have invested in shares.  But whenever you sold those shares, the first document used to go to the company's office.  It was seen by the company that when you sold the stock, what was its value and according to that you used to get your money.  This process was complicated as well as wasting a lot of time.  That's why most people avoided investing in stocks.


    But at this time the world has made a lot of progress. As soon as you purchase the shares, it'll come to your account shortly after. And if you sell a stock, then its money are going to be given to you during a short time. Nowadays, you do not even need a computer to buy or sell shares, you can do all this from your mobile.

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     TRADING ACCOUNT 

     TRADING ACCOUNT is used to make money transactions to buy stock in the stock market and to order STOCK BROKER to buy and sell shares,

    Trading account is linked to our DEMAT ACCOUNT, And once we place an order to shop for shares with the assistance of TRADING ACCOUNT, and our order completes, then the shares purchased are deposited in our DEMAT account, and therefore the value of the shares we buy Money is deducted from our trading account along side taxes and brokerage charges, and similarly when we sell shares, the shares sold are reduced by DEMAT, and the amount of shares sold is broken into our trading account by the brokerage and Tax is collected after deducting.


    After understanding about demate account and trading account, in the next step we will understand how to fund our account


    Fund your account

    Fund Account

    You need money in your brokerage account to buy shares. Some of the cash sitting in your brokerage account can be useful during your personal downturn.

    Once you have a brokerage account set up and activated, you will need to put some money into it. Funding options vary from country to country and there are some costs associated with each method.


    As costs are usually fixed, it may be wise to save before you deposit funds to reduce the "friction"—that is, associated with investing what is actually in your own shares. does not go.

    For example, if it costs you ₹10 to transfer money to your account, sending ₹100 means you're already 10% down. This is not an efficient way to invest.


    Rather, you should think about saving and sending ₹500. That way you're only down 2%. As with fixed costs, the more money you transfer, the less detrimental it is to your overall return.


    If you want to get serious about investing regularly, setting up an automatic transfer with your bank can be a good idea. In this way you can transfer money to your brokerage account every month after your salary is received. This will ensure that you remain disciplined and do not use the extra money for unnecessary purchases.


    Remember, just because the money is in your brokerage account doesn't mean you need to invest it right away. It is always a good idea to keep some cash in your brokerage account in case there is a certain market downtrend. This way you can invest in some great companies at a discount. However, don't leave all your funds in cash. Waiting for the market to dip can easily lead you to big profits.



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