How Does a Demat and Trading Account Help With Long Term Investments
One of the central goals of financial planning and investing is the creation of wealth from the available funds. Whether you opt for fixed income securities such as debentures or securities with high gain potential such as equity shares, the ultimate aim is to generate significant returns on the investment while adhering to the desired risk exposure.
In order to build wealth in the long run, it is important to focus on long term investing, and a trading account and demat account can be helpful to that cause.
What Is Meant By Long Term Investing?
Long term investing refers to an approach to investments that carries a long time horizon, ranging from several years to decades. The central premise of long term investing is buying and holding a security for a significant time period (or till its maturity) and benefitting from capital appreciation as well as periodical returns in the process.
In long term investing, short term market movements and volatility have to be largely ignored and trust has to be placed in the long term potential of the securities held by an investor.
Benefits of a Demat and Trading Account for Long Term Investing
If you wish to adopt the approach of long term investing, you must choose the financial assets of companies with strong fundamentals, significant market standing, and high growth and profitability potential.
Furthermore, you must not let short to medium term market events sway you into liquidating your investments. Trading through online trading platforms and a trading account and demat account hold several benefits vis-a-vis long term investing.
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Option To Invest In Diverse Assets
With a demat and trading account, you can invest in a wide array of assets through one trading platform. Not only can you invest in shares, debentures, and Exchange Traded Funds, but you can also invest in mutual funds. It is also possible to start a Systematic Investment Plan (SIP) through your trading account. You can, therefore, easily diversify your investment portfolio and limit your overall risk exposure through such an approach.
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Easy And Secured Access To Your Investment Portfolio
Modern-day trading platforms are easy to access and operate. The access is restricted by log in credentials known only to you, and you can have complete visibility over your investment portfolio at any point of time. You can also check the returns on each individual asset as well as the total gain/ loss on the portfolio. This way, it is convenient to gauge where you stand in the pursuit of your investment goals.
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Availability Of The Latest Market Insights And Reports
With a demat and trading account, you get access to the latest information about the market. What is more is that you can check analytical reports by market experts, which can be of great help in discerning trends (particularly long term trends), identifying investment opportunities, and understanding which direction specific sectors in the market are moving in.
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Facility Of Margin Trading
Another key benefit of a demat and trading account is the facility of margin trading. With this facility, you can execute trades only with a percentage of the total transaction amount. Since margin trading carries several risks, you must be cautious while using it.
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No Worry About The Safekeeping Of Securities
Since a demat account stores securities in a dematerialised format, you do not have to worry about safely storing share certificates and bond certificates. You can easily access any of the aforementioned certificates whenever required.
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Ability To Correct Course When Required
Trading through a demat and trading account makes it extremely convenient to monitor your portfolio. At any point in time, you can compare the performance of your portfolio with your financial goals and investment plan, and see if there are any gaps in the portfolio that need to be filled with different securities. The ability to correct course in a timely manner can be instrumental to long term wealth creation.
The Bottomline
There are several benefits of trading through a demat and trading account, particularly from the perspective of long term investing. With the access, information, and flexibility that modern-day trading platforms provide to their clients, keeping track of your investments and gauging their performance becomes seamless.