InvestorQ : What are the advantages for me by opening a DP account and holding shares in electronic form?
indhumathi Sayani made post

What are the advantages for me by opening a DP account and holding shares in electronic form?

Answer
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Ria Jain answered.
2 years ago


Actually, there are quite a few advantages. In fact, DP makes your shares safer and more secure compared to physical holdings. It is also more cost effective. Let us understand how. Demat offers a safe and convenient way to hold securities. When you sell or buy shares there is an immediate transfer of securities either into or out of your demat account. It is cost effective as there is no stamp duty on electronic transfer of securities. Very importantly, demat eliminates risks associated with physical certificates such as bad delivery, fake securities, delays, thefts etc. It also leads to a reduction in paperwork involved in the transfer of securities as well as a sharp reduction in transaction cost. Unlike the old days when you could only trade in fixed lot sizes, there is no odd lot problem, even one share can be traded;
There are also some major administrative advantages in having a demat account. You can avail the nomination facility so that in the event of any exigency, the transmission of the demat account becomes smooth. Change in the address and other details pertaining to the investor gets recorded with DP and also gets registered with all companies at the same time. So, now you do not need to write to each company individually. Transmission of securities is done by DP eliminating correspondence with companies. Automatic credit into demat account of shares, arising out of bonus/split/consolidation/merger etc is also facilitated by having a demat account. There is one more advantage. You can hold shares, debt, ETFs and even insurance policies in your demat account.