Multiplying savings quickly is possible if you invest your savings in financial markets. However, understand how to open a Demat account online and what are its benefits before investing in shares and other securities.
Even though a Demat account is safe, it is possible that some fraudsters manage to decrypt the safety protocols. Therefore, you must monitor all the trading activities closely after opening a Demat account. It is because slight errors or inconsistencies can result in a big financial loss. The full form of demat is dematerialized. It means that the securities are held in a dematerialized form in this account. Here are the four things that you must follow to avoid losses in trading:
1. Monitor the transactions:
The buying and selling activities that you indulge in through your Demat account will be recorded as transactions or orders. After buying or selling shares, check whether the orders have been successfully processed by the DP (Depository Participant).
If you have missed out on these transactions, you can download a detailed Demat account statement. You can download the statement for a particular period and reconcile it with your bank transactions to track the inconsistencies. If you find any errors or inconsistencies, notify your broker immediately.
The securities are credited to your Demat account in T+2 days. Similarly, the shares get debited from your Demat account and the money gets reflected in your account in T+2 days.
2. Don’t keep demat account in-operational:
- If you are not able to operate your Demat account for a long time, it is better to freeze it. It will avoid any unnecessary transactions and will ensure the safety of your holdings.
- While keeping the debit frozen, you may enable the credit options to receive corporate benefits like bonuses, dividends, refunds, stocks-splits, etc. You may unfreeze your demat account whenever you need it again.
3. Don’t leave a signed DIS with the broker:
- A DIS (Debit Instruction Slip) is used to transfer shares from one Demat account to another. If you have signed DIS, you must secure it in a locker. Leaving a signed DIS with the broker can lead to fraudulent activities.
- To avoid any fraud with DIS, utilize EASIEST, the online share transfer facility offered by CDSL.
4. Avoid using multiple demat accounts:
- SEBI allows investors to open multiple demat accounts. It is not possible to open multiple Demat and trading accounts with the same broker. Therefore, you will have to look for a separate broker for each Demat account. The brokerage charges, AMC (Account Maintenance Charges), and other costs will vary according to the broker with whom you have opened a Demat account. Instead of burdening yourself with these additional charges, it is better that you stick to your actual requirements.
- Ideally, you should be using only two demat accounts. One Demat account should be kept for daily trading activities and the other can be used for holding your long-term securities.
If you are a new trader, know first how to open a demat account. These are some ideas that can help you avoid the losses that may arise due to negligence or lack of trading knowledge. To fortify the security of your Demat account, keep the details like email id, mobile number, etc. updated. If there are any changes to be made, contact the broker immediately and get them done. SEBI has also made it mandatory to authenticate every trade. Therefore, keeping the contact details updated will help you receive notifications of every trading activity that takes place through your account.