Demat Account
An account that holds your shares and other securities in electronic form, replacing old paper certificates.
A demat ('dematerialised') account is where your shares actually sit. It works alongside a trading account, which you use to place buy and sell orders on the exchange.
You need a demat account to hold shares and ETFs, but not to buy a regular mutual fund, which you can purchase directly from the fund house.
Key points
- Stores shares and ETFs electronically.
- Paired with a trading account for placing orders.
- Not needed for regular mutual funds.
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Related terms
A fund that holds a basket of securities, usually tracking an index, whose units trade on a stock exchange like a share.
Market CapitalisationThe total market value of a company's shares, calculated as the share price multiplied by the total number of shares.
Net Asset Value (NAV)The per-unit value of a mutual fund, calculated as the total value of its holdings minus expenses, divided by the number of units outstanding.
Expense RatioThe annual fee a mutual fund charges to manage your money, expressed as a percentage of your investment.