It is important to understand the benefits of linking your demat account to a savings account, especially if you are about to open a demat account. If you want to trade in the Indian stock market, you need to have three accounts: a trading account, a demat account, and a savings bank account.
Let us understand why you need to open three accounts. A demat account holds all your securities, like shares, bonds, and debentures, in an electronic form. It provides you with 24 by 7 access to your securities just as netbanking allows you to access your savings bank account.
Meanwhile, a trading account helps you trade securities, which means it lets you buy and sell securities. But, to trade in securities, you need money. Hence, you need to link your demat account to a savings account. A savings account with netbanking allows you to access your funds from anywhere and anytime.
Want To Open A Demat Account? Learn Why You Should Link It To A Savings Account
Find below the main benefits of linking your open demat account to a savings account:
1. Access To Funds When Buying Stocks
When you link your demat account to a savings account, you get access to funds in that savings account to buy stocks. By linking these accounts, you can transfer funds to purchase stocks that you wish with just your laptop or a smartphone.
2. 24 By 7, 365 Days Access To Your Investments And Savings
You will be able to access your investments and savings from anywhere and anytime by linking your demat account and savings account. Suppose you hear that a company has made a major announcement and you want to buy its stock, but you are on vacation. You do not have to worry because your demat and savings accounts will let you buy the stock with great ease.
3. Stress-Free Trading And Investing
When a demat account is linked to a savings account, you can trade or invest whichever security you want. Let us compare this to pre-demat days. Those days you had to call a broker after finding a trading opportunity.
Simultaneously, you had to ensure that you had adequate funds in your bank account. As a bank account and a demat account were not linked, it was a hassle to trade. However, that is not the case now because you can link your demat account to a savings account.
4. Quick Settlement Of Trades
Linking a demat account with a savings account results in fast settlement of trades. A transaction is not settled unless securities are delivered to a buyer and cash is delivered to a seller. As a linked savings account allows you to transfer funds almost instantly, you can buy stocks with great ease. Similarly, you can sell stocks and easily receive cash in your bank account.
5. One Platform For Managing Your Investments
If you link your demat account with a savings account, you will have one platform to manage your investments. You will need to login to your demat account to buy or sell shares and that’s about it. If you want to buy shares, your demat account will take you to the linked savings account.
Conclusion
You cannot be an efficient trader today without linking your demat account to a savings account, as the stock market is so competitive that trading opportunities vanish within seconds.
Even if you are a long-term investor, you should link your demat account to a savings account to have a seamless and hassle-free experience while buying and selling stocks.
Last but not least, you should ensure that you have sufficient funds in your savings bank account. Without enough funds, you may not be able to take a position.
In case, you have stopped using a demat account and opened another demat account, you should learn how to deactivate a demat account. It is important to close a demat account if you do not need it. Otherwise, you will have to pay unnecessary charges to your broker. Meanwhile, you should link your new demat account to a savings account.
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