When it comes to investing money, you will see that you will come across various types of accounts. It is very important that you understand the differences and the similarities and the concepts behind these accounts if you want to be aware of the investment options that you have which will help you to invest more lucratively. One of the most confusing differences when it comes to the field of investment is the difference between a demat account and a trading account. However, if you are seriously considering investing in stocks and shares then this is a difference that you need to be very well aware of.
Difference between the nature of two accounts
There is a very basic difference between the two accounts. Your securities, that is your bonds and shares are in the form of papers and documents which need to be stored electronically. Your demat account is used for this storage purpose. On the other hand, when it comes to a trading account, it is this account that is used for buying and selling the stocks and the shares and investing in the stock market. In order for you to be able to take part in trading you will need to open demat account as well as an online trading account.
Let us take a look at some of the finer differences between the two.
Demat is measured at a specific point whereas trading A/C is measured over a period of time
Suppose right now this month, you want to figure out how much wealth you have accumulated and how much wealth you have got. In order for you to do that, you will have to check your demat account. However, if you want to see what kind of transactions you have taken part in up until now, then you will have to take a look at your trading account. Thus, if you get a reflection of a longer period of time with an online trading account, whereas in case of a demat account, you get to know where you stand wealth-wise at one single point of time.
Difference in accounts interface when you buy/sell shares
There are differences as well when it comes to buying and selling shares for the different account interfaces. It is important for you to educate yourself about these differences before you start investing.
Possibilities of having one account without another account
It is indeed possible to have only a demat account and not a trading account. A trading account is required if you want to buy and sell shares in the stock market. But if you simply want to keep a check on your balances and shares and keep them stored you can go for a demat account only. Now whether or not you will need to open demat account depends on what you want to trade. If you want to trade in your equities then you need to have a demat account. However, if not and you want to trade only in future options, then you can have a trading account without a demat one.
How to open a demat account and a trading account
The process of opening both these two types of accounts can be done online. All you need to do is conduct a thorough due diligence, visit us online, and get the ball rolling. Your demat account or trading account will be ready to flourish in no time!