InvestorQ : How is a Demat account different from a brokerage account?
Purvesh made post

How is a Demat account different from a brokerage account?

Answer
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Khushi Patel answered.
1 year ago


Demat account or dematerialized account is an account that allows you as an investor to hold shares, bonds, government securities and mutual funds in electronic form. If you’re keen to make transactions in the stock market, it is mandatory to have a Demat account. It is basically like a bank account, where you have your money and respective entries are done in bank passbook. In similar form, securities are too held in electronic form and are debited or credited accordingly.

Brokerage Account:
Many people might get confused that brokerage account and Demat account are same, but it is not. Let me explain, a Brokerage account is largely a platform to facilitate transactions in various market-related instruments.

Conclusion:
To conclude, the demat account simply holds various securities in electronic form. A brokerage account, on the other hand, facilitates trading in these securities. Let us understand this with an example- You have 2000 INR in your wallet. You enter in a departmental store, buy stuff, and put it in your bag, and then pay the due amount from your wallet. In trading, the wallet is a brokerage account, the shopping bag is Demat account and the departmental store is share market.