Demat Account is like a Bank Account where you keep Securities (Shares, Bonds, Debentures Mutual Funds) instead of cash balance. Click here to open Demat and Trading Account with Zerodha
Now Lets understand with an Example : You got a Job with a Monthly Salary of Rs. 50000, You Spent 70 % of your total income in household , tuition fee and Home Loan installment , Now you are remaining with Rs. 15000 as savings.
Now you have following options :
- Kept Money in savings bank Account
- Make a fixed deposit with Bank
- Buy Mutual fund
- Buy Real Estate (very small small to invest in real estate)
- Buy Corporate Deposits
- Buy Equity shares
Now suppose you want to buy Equity shares of some Listed Companies , Suppose Infosys, Tata or Any other Company and want to hold for Long term.
You have to do following things :
- Search for Registered Stock Brokers (some are Zerodha , Upstox, )
- Provide you contact details to brokers , so they can contact you
- Keep Aadhar Card, PAN card, Last Six Month Bank Statement and Cancelled Cheque Handy
- You will receive call from broker.
- Opt for opening an account with Aadhar Card ( Instant Account Opening )
- Send an email with Scanned Documents to Broker
- Pay Account Opening Fee
- Broker will process your application
- You will receive your User id and Password from your broker , once account is opened ( Trading Account)
- After 2-3 days , your Demat Account will also get opened .
From Whom you are opening Demat account is known as Depository Participant (most of times your Stock Brokers will be DP)
Now you are ready to buy shares :
- Open your Trading Account , if you opted for Zerodha than login via kite
- Search for Company in Market Watch
- Add funds to your trading Account
- Buy Shares
- Now After Two Days (T+2) , these shares will be credited to your Demat Account ( No Physical Shares Certificate)
- If you will getting benefits of corporate Actions like : Dividend , Bonus Shares etc.
- You now become shareholder of the company , you get all rights as shareholders : like to vote at Shareholders Meeting .