Difference Between Demat Account & 3 in 1 Account

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:

  1. Choose a broker that provides the 3 in 1 account services.
  2. You just have to fill a single form to open all the 3 accounts.
  3. You have to submit certain documents such as PAN card, Aadhar card, photograph, passport, etc, as mentioned by the broker.
  4. 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!

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