Once you decide to invest in the stock market or you have started to develop interest towards it then, it is obvious to have this question in your mind. Let us try to highlight some of the major differentiation between both these accounts here.
What is ‘Saving Account’?
Saving account is an option to park your money in the banks or financial institute on nominal interest rate. What distinguishes one saving account from other is the reputation of institution which is directly related to safety of your money.
What is ‘Demat Account’?
In a simple word, it is an account to hold your stocks into electronic form. Holder of such account can preserve the share, bonds and other securities without any paper hassle. It completely eliminates the physical transaction and makes it easy and reliable for investor to hold their assets.
Can we use saving account to buy shares?
Technically, the answer is ‘No’, at least as of now. One can link the saving account to particular demat account for smooth transaction. It will provide easiness to buy stock as amount would directly be debited from saving account and shares will be transferred to demat account. Hence, it should be clear now that to pull out the transaction, one needs bank account but to hold the shares or securities, a demat account is required.
When Merits overpower the demerits
Investors or even students might have this question as what are some of merits which attract them to open a demat account. There are multiple advantages of the same and a vice versa. However, the merits have certainly take over the demerits and investors are happily and enthusiastically doing transactions via demat accounts. Let’s have a look on some of the major points here to make it smooth to understand.
Merits of Demat Account:
- Allows to hold securities in the electronic form
- Easy to open and Update Online
- Hassle free
- Eliminates risks related to forgeries and cheating
- It is multipurpose account which allows to hold debts, mutual funds and other securities
- One can even perform transaction of single share
- Real time transfer of securities
Demerits of Demat Account:
- Annual Maintenance Charge is levied on such accounts irrespective number of transaction.
- A person who is not tech savvy can find it difficult to perform transaction.
- Sometime due to real time transfer advantage you may miss long term holding opportunities.
- Though one has to become little bit technically sound to perform the transaction via demat account but, investors are finding it easy to access. Traditional investors who are passionate about market trends, have been upgrading themselves to get the rid of old paper based market practices.
Hope you like this article. Feel free to contact us in case you want to know further.