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.
1. Difference Between The Nature of Demat and Trading Account
There is a very basic difference between demat account and trading accounts in India. Your securities (your bonds and shares) are in the form of papers and documents which need to be stored electronically. Your demat account is used for the electronic storage of these papers and documents. On the other hand, a trading account is used for buying and selling stocks/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.
2. Demat Account is Measured at A Specific Point whereas Trading A/C is Measured Over a Period of Time
Suppose 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.
3. Difference in Demat & Trading Account’s 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 in the interface of Demat and trading account before you start investing in the Indian share market.
Possibilities of having One Account without Another 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 open a demat account. Now whether or not you need to open a demat account depends on what you want to trade in. If you want to trade in equities or stocks 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 a demat account & trading account in India can be done online. All you need to do is have your documents in place, contact us, and get the ball rolling. Your demat account or trading account will be ready to flourish in no time!