In this article let’s first understand what is a Demat and 3 in 1 account. Let’s begin with a Demat account.
Remember the times when we had to rely on a bunch of papers while investing in the stock market? Every time, while buying or selling shares, new documents/papers kept on adding up. This created a lot of hassle and we had put more effort into organizing and securing the documents.
To overcome this issue, the concept of a Demat account was introduced in India by the National Securities Depository Limited (NSDL) in 1996. Demat account stands for a Dematerialized account. NSDL is a depository institution that holds our security assets or helps us in trading them through a Depository Participant (DP). DPs are brokerage firms or banks that get a license from the NSDL to work as DP. DP is an agent that acts as a middle-man or stockbroker between the investors and the depository.
Following are the functionalities for opening a Demat account.
- It is like a bank account or a locker wherein we place our documents in an electronic format.
- With this account, we can possess a wide range of investments such as bonds, equity shares, government securities, and mutual funds.
- Demat accounts can also be credited or debited every time we buy or sell stocks, commodities and currencies.
Let’s understand what a 3 in 1 account is?
3 in 1 account includes trading, Demat and bank accounts together linked with a single account. Having 3 in 1 account resolves the issue of collaborating with several partners for trading and transaction.
There are many benefits of having a 3 in 1 account, let’s quickly go through them:
- Funds are transferred quickly since accounts are linked to one account. You do not have to validate or authenticate with a third party for transferring funds.
- You get the benefit of having a free fund transfer and there’s no upper limit for the same.
- You can place and organize your assets such as mutual funds, stocks, cash, etc., in a single account.
The major difference between a Demat and 3 in 1 account is, since a Demat is a single account, you have to collaborate with multiple partners to transfer funds. In the case of 3 in 1 account, you can do the same with a single point of contact.
Following are the steps to open a 3 in 1 account:
- Choose a broker that provides the 3 in 1 account services.
- You just have to fill a single form to open all the 3 accounts.
- You have to submit certain documents such as PAN card, Aadhar card, photograph, passport, etc, as mentioned by the broker.
- Once the verification process is clear, you can now start trading hassle-free!
Hope you have understood the Demat and 3 in 1 account concept. You are now ready to choose and start trading!