Is a Demat account required for mutual funds?
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- Updated On:07-Mar-2021
- Replies:1
Short Answer
No, a Demat account is not required for investing in mutual funds in India. However, having a demat account can be beneficial for some investors.
Detailed Answer
Many investors have a confusion about the requirement of a Demat account for a mutual fund. If you are wondering about it as well, then the answer to this question is "No". You don't need a Demat account for mutual funds. However, holding a Demat account for mutual funds has its own benefits.
Here in this article, we are going to know in detail about the requirement of a Demat account for a mutual fund along with its pros and cons. So let us get it started.
What is a Demat Account?
Demat account is a special type of account that is usually used for holding various securities such as shares, bonds, units of a mutual fund, and so on in electronic format. The main purpose behind having a Demat account is to hold various types of securities that have been bought (also known as dematerialized), which makes security trading easy for the investors during online trading.
Is a Demat account required for investing in mutual funds?
The answer to this question is "No". It is not mandatory to have a Demat account for a mutual fund. However, having one can be beneficial for some. Below you will find some of the pros and cons of having a Demat account for a mutual fund.
Pros
- A Demat account allows buying, selling, and managing mutual funds effortlessly.
- Provide a centralized platform to manage several funds.
- Users can generate a single statement for all funds.
- Investors can also add and manage their nominee details.
Cons
- There's a maintenance cost to avail a Demat account.
- There are various upfront and trail commissions charged for the Demat account.
So we hope you got the answer to your question, Is a Demat account required for a mutual fund? The answer is a no but having one has its own benefits for certain investors.
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Discussion (0)
Investors looking to invest in mutual funds without a Demat account can invest through financial institutions, independent financial advisors, AMC, and online portals.
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