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A consolidated portfolio view along with simpler trading for some fund types are two benefits of holding mutual fund units in a Demat account.
Choosing to use a Demat account for mutual funds has several advantages.
In India, mutual funds are among the most widely used forms of investment since they provide an easy way of gradually increasing wealth. If you are wondering if investing in mutual funds requires a Demat account, the answer is no. Investing in mutual funds does not require a demat account. However, holding mutual funds in a demat account provides more convenience, security, and a consolidated view of the portfolio.
“Dematerialised” or digital securities can be held in an online account known as a Demat Account. You can hold a variety of securities in a Demat Account, including bonds, stocks, mutual funds, and more. Purchasing mutual funds does not require having a Demat Account.
If you purchase mutual funds through a broker like Zerodha or a stock market like the BSE or NSE, the units are kept in your Demat Account. If you also invest in stocks or bonds, it is convenient to have a Demat account. Mutual fund companies allow direct investments even if you do not have a Demat Account.
Investing in mutual funds does not require a Demat account. Without a Demat account, you can invest directly in mutual funds through AMC distributors, websites, and apps. But in some cases, having a Demat account is necessary to invest in mutual funds:
Exchange-Traded Funds (ETFs): ETFs are a type of mutual fund that is traded on stock exchanges. One must have a demat account to purchase and sell units.
Consolidated Portfolio View: A mutual fund Demat account may be useful if you prefer to examine and manage mutual funds in one location along with other investments (stocks, bonds, etc.).
Close-ended Funds: Certain closed-ended mutual funds that are listed on stock exchanges cannot be traded without a Demat account.
Choosing to use a Demat account for mutual funds has several advantages and can streamline the investing process. Here are some advantages of having a Demat account:
Single Platform for All
The account provides a shared location for you to keep all of your investments. It is easier to monitor and manage your finances and to make wiser investment choices that will yield positive results.
Automated Exchanges
Bonus units, interest payments, and dividends are all automatically credited to your demat account. This automation streamlines your financial planning by saving you time and guaranteeing you don’t miss any cash entitlements.
Better Security
There is more security with a Demat Account where all your data is kept safe. Important documents, certifications, etc., are not at risk of physical loss or damage. Using the account also lessens the likelihood of being a victim of fraud or theft.
Easy Transfer
Transferring units from one mutual fund Demat account to another is easy because it cuts down on the amount of paperwork and time needed to transfer assets. The electronic format guarantees a more seamless transfer process than the conventional folio-based method.
Keeping your investments (such as stocks or mutual funds) in a Demat account is similar to keeping them in a digital safe. You can make wise investing choices if you know how mutual funds and Demat accounts relate to one another.
A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, we cover al…Read More
A team of writers and reporters decodes vast terms of personal finance and making money matters simpler for you. From latest initial public offerings (IPOs) in the market to best investment options, we cover al… Read More
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