Do you remember the days of filling out lengthy documents and squeezing through the mob to submit bids on shares? The investor still had to wait in line to collect and store the share certificates in a folder, so the process was far from over. Additionally, selling shares required repeating the same procedure.
With the introduction of Trading and Demat-based share purchase and sale, India’s traditional approach is no longer used in the share market. Currently, shares can be bought and sold with a single click. The shares are transferred to your trading and Demat account as you purchase them using an online trading account. Similar to this, shares are directly sold from the Demat account when you sell them.
You can think about investing in stocks and securities if your objective is capital growth and obtaining the best returns possible from the market. Long-term investing in shares entitles you to gains that can reach a higher profit, giving you the chance to build wealth. However, you must be familiar with the fundamentals of the share market before you begin trading.
Trading Account: What is it?
A trading account is a platform that enables the purchase and sale of shares. It acts as a link between the bank and Demat account of the investors. Shares bought using this account are added to the buyer’s Demat account. The Demat account is debited for sold shares, while the bank account is credited for sales revenues. There is no limitation on the number of Demat accounts that one person may open.
How to Buy Shares?
In the era of digitalization, buying shares only takes a few clicks. The processes needed to purchase shares are as follows:
● Acquiring a PAN card
To start trading on the stock market, you must first get a Permanent Account Number (PAN). A PAN card is a recognised form of identification. When opening a Demat account or trading account, the PAN is a required document. The government uses it to determine your tax due.
● Activate a Demat account
It is essential to open a Demat account before making an online share purchase. A Demat account, also known as a Dematerialized account, is where actual shares that you possess are turned into an electronic format through the process of “dematerialization.”
You will receive your special Demat account number from the broker once you register an online Demat account. Because it is used when purchasing or selling shares, this account number is significant. The ability to deposit and withdraw money from a Demat account is comparable to that of your bank account. Your account will reflect the number of shares that were either purchased or sold, respectively.
● Sign up for a trading account
A trading account must be opened as the next step. To buy and sell shares on the stock market, you need a trading account. When you have a Demat Account, which allows you to hold shares online, you need a Trading Account to conduct the purchase and sell transaction. Your specific Trading Account number must be provided when buying shares online.
● Acquire a broker or brokerage platform
You must employ a broker’s services to buy shares because you cannot do so directly on the stock market. Being the bridge between you and the stock market, a broker serves as an intermediary. India’s regulatory organisation, which accredits brokers, is called the Securities and Exchange Board of India (SEBI).
● A bank account is required
You need a bank account to connect your trading account and Demat account. You can only buy shares online after providing a bank account.
To purchase shares online, you must place the necessary order through your Demat and trading account. The broker will then forward the transaction to the stock exchange for settlement. Following this, the shares will be transferred to your Demat account within two working days of the completion of the settlement. Additionally, a debit will be made from your bank account to cover any additional adjustments or purchase charges.
● Acquire your unique identification number (UIN)
SEBI has mandated that investors obtain a UIN to compile a database of all Market Participants and investors. A UIN can be obtained from Point of Service (POS) representatives chosen by NSDL. But you should know that a UIN is only necessary if you have a capital of rupees one lakh or more to trade with. Once a purchase order is placed, the stock exchange matches it with a corresponding sale order. The quantity of purchased shares is added to your Demat Account after settlement.
Wrapping Up
To begin trading, opening a Demat and trading account is the most crucial step. As a result, whenever you decide to trade shares, always remember to pick a reliable financial partner. The greatest trading platforms in the business, together with individualised portfolio analysis, are offered by Choice India, an easy-to-use interface for setting up a Demat account and buying shares. Say “Hello” to a new era of investing by creating an account and submitting your PAN, Aadhaar, and bank information.
