Benefits of Opening Demat Account and Linking With Your Savings Account

Last Updated on March 7, 2024 by admin

A demat account and a trading account are required to trade in the stock market. You hold your securities in electronic form in the demat account, whereas a trading account is essential to sell and purchase securities. However, a savings account is also needed to add the funds required to buy securities. If you link the savings account with your demat account, it facilitates seamless transactions. 

The money will get deducted from your bank account automatically when you buy shares. Once the transaction is complete, the shares will be credited to your demat account. Similarly, when the shares are sold, they will be debited from your demat account and the money you get by selling them will be credited to your savings account.

Preferring different service providers for trading accounts, savings accounts, and demat account opening online can complicate things. Therefore, it is recommended that you open all three accounts from the same service provider. Many of them offer a 3-in-1 account in which all three accounts are connected and facilitate seamless transfers of funds between a savings account and a trading account. 

If you hold a 3-in-1 account, you don’t need to open multiple applications to trade, track investments, or monitor the bank account. It is because all these activities can be done through a single portal. 

Why link a savings account with the DEMAT account?

Linking a savings account with your demat account provides these advantages while trading:

Convenience to Make Transactions Anywhere Anytime: 

Linking a savings account with the demat account will help you to carry out the transactions from any given place at any given time. The stock market is quite volatile and therefore, you must take positions quickly without losing any time. 

When a savings account and a demat account are connected, you can buy or sell securities in real-time and make best use of the latest trends and opportunities offered by the stock market. It also provides convenience while participating in intraday trading as you might need funds urgently to buy a stock. 

Handling Funds and Securities Through a Single Application: 

Handling funds and securities through a single application allows you to invest idle funds in your savings account smoothly. Also, you don’t have to think twice before undertaking any trades from your smartphone or laptop. This kind of flexibility is needed, especially if you are a newbie trader. 

Easy transfer of funds to and Fro:

Having your savings account connected to your demat account helps you in many ways. Whenever you face a shortage of funds or if your salary gets delayed, you can transfer the trading profits to your bank account immediately. Similarly, if you don’t have enough margin left in your demat account, you can transfer the money from your savings account to your demat account instantly.

Opportunity to Invest in Multiple Asset Classes:

You can use the extra funds lying in your savings account to trade in stocks, futures and options, commodities, and other asset classes. This means that you can tap into all the earning opportunities that the stock market offers without having to worry about a shortage of funds. It also helps to diversify your investment portfolio, which in turn balances the risks and returns. 

Low Cost:

When you have the demat and savings accounts linked to each other, the transfer of funds between both accounts is seamless. Also, the transfer fee is not charged when both accounts are linked together. You can initiate as many fund transfers between these two accounts without worrying about any transaction fees. Moreover, there is no upper limit value for fund transfers when these accounts are linked. 

Extra Investments Offers: 

When the bank account is linked with your demat account, you can invest in mutual funds, gold bonds, and other investment options that are exclusively offered by banks. These additional investment options help you to diversify your investment portfolio further. Obtaining a loan against securities is also much easier when the demat account and banking account are linked. 

Corporate Benefits:

Corporate benefits like dividends are credited directly to your bank account when you link it with your demat account. 

There are several benefits to opening a 3-in-1 account. However, you can still link your existing bank account with your 2-in-1 account, which includes a demat account and trading account and receives most of the aforementioned benefits.

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James Carter

James Carter is a renowned American jazz saxophonist, born on January 3, 1969, in Detroit, Michigan. He grew up in a family of musicians, with his father being a saxophonist and his mother a classical clarinetist. Carter started playing the saxophone at the age of 11 and quickly developed a deep passion for jazz music.

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