In the current investment environment in India, demat account has become the foundation of systematic investing. It is also important to know that the demat account is an important part of SIP investment, so whether you are a new investor or an experienced one, proper knowledge of how to use a demat account in the process would be advantageous in making a well-informed choice of investing your money.
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What Makes a Demat Account Essential for SIP Investments
The demat account acts as your online safe where you save securities in electronic version, and there is no use of share certificates. Whenever you begin investing in SIPs, especially mutual funds, your units are in turn placed on this account electronically. This electronic wallet will make your investment portfolio transparent and very accessible.
There is a seamless experience in the integration of your demat account, with SIP investments. Each SIP payment you make every month will be recorded in your demat account which will reflect the exact number of units of purchase at current Net Asset Value (NAV). Such a real-time tracking ability is vital in better understanding the growth of your investment and also in making pertinent decisions regarding your portfolio.
Streamlined Investment Management and Portfolio Tracking
A demat account changes your investment experience in SIP. You do not have to match several statements issued by various fund houses in order to reconcile investment, rather you see the portfolio of all your investments in a consolidated view. Through this harmonization, it becomes much easier to observe performance under different schemes of mutual funds and asset classes.
It is also easy to switch between various investment options, with the help of a demat account. When all is centralized under your demat account, it becomes far easier to do any changes in the frequency, change the amount you are using as SIP or change the fund into which you are doing the SIP.
Leveraging Technology for Return Calculation
Demat present day accounts are also coupled with modern amenities, such as options of an inbuilt SIP return calculator. The calculators can assist you to estimate future returns using various scenarios of investment and make intelligent decisions regarding your SIP investments. It is also possible to play around with different parameters like the amount of investment, tenure and planned returns in order to know how your wealth may increase with time.
The sip return calculator that comes along with your demat account will work out real time calculations which will be done according to the actual performance at the time of investments you make.
More Single Tax Management and Reporting
During the taxation period, it makes everything easier when your SIP investments are connected to the demat account. You get consolidated statements where capital gains, dividends and other pertinent tax information are clearly shown. Such extensive reporting allows a taxpayer to make appropriate tax returns and deductions easily.
Conclusion
Demat account is no longer an option in the new-age SIP investing. It has the infrastructure to build wealth systematically, and also offers such features of sip return calculator that help you to make intelligent investment choices. Safety plus convenience plus ability to track every bit of the transactions is what makes the demat accounts a must have for any serious wealth creator with systematic investing plans.
