What are the advantages of opening a Demat Account?

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Despite several risks involved, mindfully trading in the stock market can reap great benefits for investors. Opening a Demat account with a depository partner can help kick-start the trading journey. This makes trading simpler and faster which was not possible with physical trading earlier. The following are the advantages of making a Demat account-

  1. Eliminates multiple Risks- Physical certificates need proper maintenance to protect them from wear and tear. There is a danger of theft or loss. Even a buyer can be duped into buying forged documents. Because of all these risks involved, the holder of these certificates can be under constant stress. The Demat account acts as a digital locker. Here, the securities are present in non-paper electronic format and cannot be stolen, misplaced or tampered with. This is, thus, a completely safe way of storing financial assets.
  2. Faster transfer of securities – Earlier because of paper certificates being involved in a transaction; the settlement process was complex and lengthy. Sometimes errors in paperwork could delay the entire process. Now with a Demat account, the trading process has become quick and hassle-free. The settlement time has also been reduced because of no paperwork involved. For example, in the Indian market, once the transaction is complete, the shares are automatically reflected in the buyer’s Demat account by end of T+2 days.
  3. Cost reduction- Earlier Transactions involved lengthy paperwork and additional charges like stamp duty or handling fees. Online Demat account eliminates these unnecessary expenses. Opening an account with the Discount broker can be advantageous as there are no account opening fees. Even the brokerage fee charged is very little. Before signing up, always make sure there are no hidden charges.
  4. Financial instruments under one roof- Before dematerialisation, investors had to manually keep a record of their investments. Now Shares, bonds, mutual funds and many other assets are conveniently stored in a single online account. No need to keep tabs on these instruments separately. The investments can be swiftly and easily accessed anywhere and at any time using mobile phones, tablets, laptops and other electronic devices. Foreign investors can also open a Demat account to safely invest and trade in the Indian stock market.
  5. No quantity rules (odd lot issues)- Before the advent of the Demat account, the shares could only be bought or sold in specified quantities. But this online platform has made it possible to buy or sell even a single share.

Getting a loan is easy- The owner can pledge these securities as collateral to get a bank loan if any need arises.

  1. Nomination facility- A nominee can be appointed as per the procedures of depositories. The nominee is eligible to access the deceased’s shares and securities.


Demat account from 5paisa keeps your financial securities safe in a dematerialised way for quick and convenient trading. It is important to choose the right depository partner or broker that further simplifies your trading journey. The account opening with a partner can be done within a few minutes by submitting some documents and filling in the required information. Further, connecting it with the trading account can be beneficial as it eliminates the need to mention necessary details every time a share is bought or sold.

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