What is a Demat and Trading Account?
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Hello learners in today's time having a source of passive income is very income important talking about the significance of the same mr. Warren Buffet has quoted if you do not find a way to make money in your sleep then you will work until you die but passive income comes in the role of investment once you've decided to step into the world of stock market the first and foremost requirement is that offer d-mat account but what is the d-mat account what purpose does it serve you learn on that in this video to start with let us rewind into time before 1995 there was no online system an entire investment or trading was carried out physically that is the buying and selling of shares used to take place on paper and the shares were allotted in the form of certificates but we all are aware that peoples do not last that long so many investors face this issue where their share certificates either got torn or even got lost sometimes in fact the entire procedure from filing an application to submitting it with NSE or BSC then receiving the certificates used to be a tiring and lengthy process but with the introduction of the online system
The process of buying and selling shares became hassle-free but the online system the existence of a denied account was born the term d-mat is derived from the word dematerialization that simply implies the abolishment of all the material or paper certificates after semi ruled out the deposit and deposit three participant Act in 1996 the online buying and selling were enabled for every investor that was a little history of how did not accounts came into existence that's what is the dnat account and what is a trading account simply put a d-mat account a similar to your bank account where the shares are whereas the buying and selling of the same take place wire a trading account the sporty Matt and trading is necessary if you wish to invest take a practical example from real life when you go out to shop for various necessities you pay the required money from your wallet to the shopkeeper so here your wallet acts as a d-mat account whereas the give-and-take of money are initiated by you so your role is similar to a trading account there are some basic documents needed before you register for opening a d-mat account those important documents include bank card photo your address proof bank statements of the last three months one canceled check and one check of the amount you wish to invest
However if you're getting your d-mat account opens with a bank like ICICI HDFC etc then you need not submit a check in this case you can transfer the money directly from your savings account to the denied account and then buy or sell shares via a trading account as a beginner there are two things one must remember first while getting your d-mat account opened be aware of the hidden charges terms and conditions that must be read thoroughly second be nice to the investment world at times people end up hiring a broker to manage their account but one cannot deny that no one else apart from you can manage your hard-earned money in a better way also if you get associated with a broker then you are bound to pay brokerage charges while both buying and selling shares in case of either profit or loss the brokerage charges will be covered in our next video so stay tuned for that