What are the advantages and disadvantages of a demat account?

[Yashodhaaa]

What are the advantages and disadvantages of a demat account?

[KartikBhatt]

Advantages of Demat account are:

Safety and security: The most significant benefit of a Demat account is the protection and security it provides. When financial assets were maintained in tangible form, there was always the risk of share certificates being lost or stolen. It is safer and more secure to own shares in Demat form. When assets are held in Demat form, there is a negligible risk of theft or loss.

Easy transactions: Because of dematerialisation, in the tragic case of a Demat account holder's death, ownership of assets kept in the Demat account can be rapidly passed to the next of kin.

Whereas, the disadvantages of a Demat account are:

Cost: One of the primary downsides of a Demat account is the expense of creating and maintaining a Demat account. Account opening fees, transaction fees, custodian fees, and yearly maintenance fees are all included in the cost of a demat account.

Tech savvy: While you do not need to be a technological specialist to comprehend and handle a Demat account, you do need to be tech knowledgeable. Often, investors rely on their brokers to complete a transaction, which might result in fraud or theft of cash by the broker.

Dishonest brokers: Finding an honest, fiduciary broker is like looking for a needle in a haystack. Many brokers engage in proprietary trading, which means that they act as the counterparty to a client's deal. However, at IIFL, they adhere to the highest corporate governance standards and assure 100 percent openness with zero percent conflict of interest.

While Demat accounts have certain drawbacks, the benefits far exceed the drawbacks by a wide amount. Because a Demat account is required to trade in the stock market, instead of avoiding it because of a few unscrupulous brokers, you may conduct appropriate research and create a Demat account with a known, fiduciary stockbroker in India.