People invest in various securities to achieve their financial objectives. Managing these investments may seem complicated, especially for beginners who are new to the stock market. A Demat is a platform that makes this process easy and enables eligible securities to be stored electronically in one place. The types of investments that can be held, however, will be subject to the security and the services provided by the depository participant. Knowing which securities can be put together in one account can make it easier for investors to manage and track their investments.
What Can You Hold in a Demat Account?
A Demat account is used to store securities that are eligible for demat. Investors don’t have to store physical certificates; instead, they can check the holdings in their account. Here are some of the popular securities that can be kept in the demat account.
Shares
A listed company is the company whose shares are listed on the stock exchanges and can be kept in a Demat account. With a linked trading account, an investor can buy shares and the investment will then be credited to his/her Demat account after the settlement process. The investor’s shares will be withdrawn from his account once he sells them.
Exchange-Traded Funds (ETFs)
Exchange-traded funds, or ETFs, are investment funds traded on stock exchanges. They may track an index, a commodity or another underlying asset, depending on their structure. Like listed shares, ETFs can generally be held in a Demat account.
Holding shares and ETFs together allows investors to view different investments through one account. However, the risks and costs associated with each investment depend on the specific security and its underlying assets.
Bonds and Other Securities
Certain bonds and other debt securities can also be held electronically in a Demat account. These may include eligible listed bonds and other securities supported by the depository system.
Some government securities and other investment instruments may also be available for electronic holding, subject to the applicable rules and account arrangements. Investors should check the eligibility of a particular security before purchasing it.
Mutual Fund Units
Eligible mutual fund units can be held in Demat form, although investors may also hold mutual fund units directly through the relevant mutual fund or registrar platform. The method of holding depends on the transaction route and the investor’s account arrangements.
Therefore, investors should check whether their mutual fund investments are held in Demat form or maintained separately.
Can All These Securities Be Held in One Account?
Yes, a single Demat account can generally hold multiple eligible securities, including shares, ETFs and certain bonds. Investors do not usually need a separate Demat account for every company or type of security.
For example, an investor may hold shares of several listed companies, units of an equity ETF and eligible listed bonds in the same account. These holdings appear as separate entries in the account statement, making it easier to review the securities held.
A demat account opening app can simplify registration by allowing users to submit their details and complete the required verification digitally. However, investors should read the terms carefully and provide accurate information during registration.
Benefits of Holding Multiple Securities in One Demat Account
It can be easier to manage a portfolio if eligible investments are held in a single account.
- Centralised holdings: Investors can see multiple eligible securities in one account, rather than have to maintain multiple accounts for holdings.
- Better tracking: Account statements allow investors to keep track of securities amount and information.
- Electronic records: Digital holdings eliminate the need to handle physical share certificates, and make transfers easier.
- Easy transactions: A linked trading account enables a trader to buy and sell securities traded on markets.
- Eligible securities organised together: It may be easier to review investments and determine portfolio allocation.
What Should You Check Before Opening a Demat Account?
Check the agent’s services and fees before opening an account. Look at the opening fee, annual fee, transaction fees, and any other fees that may be relevant when opening an account.
Investors should also check the registration information of the provider and ensure that the account allows them to invest in specific types of securities. Security features, customer support, and access to account statements are important considerations as well.
After the account is active, the Demat app can provide the user with details about their holdings, account activity, and other investment services that may be available. The details vary according to the provider, and even with regard to the account type.
Conclusion
A single Demat account can hold shares, ETFs and several other eligible securities, which makes investing in one place easier. Some financial products, however, are held under
other systems and investors are advised to verify the eligibility of the investment before purchasing the product. Analysing account fees, security measures, and services offered can ease the decision-making process. Platforms like 5paisa provide digital investment services. When opening an account, it is important to understand the features available for each and the associated terms to make sure that you choose an account that will work for you.
