If you are considering investing in the stock market, you have likely come across the difference between Demat and Trading account, where as a confident investor, it is important to understand the differences between the two, even if you are just starting out. So, let’s explore which account would best suit your investment needs.
To gain a thorough understanding of the difference between demat and trading account, we will delve into the details in the following article. By the end of it, you will have a clear understanding of the distinctions between the two.
Difference Between Demat Account and Trading Account
A demat account also known as dematerialized account which is an electorigic or digital form of holding your bonds, shares, mutual funds and other securities. On the other hand, a trading account allows you to buy/sell the shares present in the physician share market.
Also read: How to Transfer Shares from One Demat Account to Another
In general when someone asks which accounts necessary, then both since the demat allows you to store the shares in a digital form whereas the trading done through your trading, allowing you to buy, sell and invest in the share market.
But you can always have a trading account without a demat account but you cannot have only a demat without a trading. But in cases such as investment in an IPO for any public company, a demat is necessary but not a trading.
Also read: Stockbroker Meaning
How to Open Demat and Trading Account Together
Yes, you can always open both the accounts together or not as well. Due to the recent development in the Investment market, a lot of services such as Zerodha, Upstox and more launched which will help you create your demat and trading together.
There are charges to your account that are annual recurring charges and at the same time, as you know behind the transactions made always a service tax aligned that is how these services actually work.
Even in the case of an offline brokerage where you might investing, there still a brokerage charge applicable either on the basis of profit made, monthly or annual as well.
Is a demat account necessary for trading?
No, a demat account is not necessary for trading because you can always buy and sell shares in the share market through your trading account or else through brokerage. But in cases where you want to invest in an IPO for public companies, you will need a demat account.
Is a demat account the same as a trading account?
There is a clear difference between a demat account and a trading account. A demat account is a digital way of storing investments in the form of bonds and shares, whereas a trading account is specifically designed for buying and selling shares in the physical share market.
Is Zerodha a demat account or a trading account?
At Zerodha, rest assured that you can have both a demat and trading account without any hassle.