Investors who want to buy small-cap mutual funds must have a Demat account as it plays a very crucial role in managing the funds. A Demat account not only helps the investors in buying, holding, and selling small-cap mutual funds but it also helps in eliminating all the risks involved in the physical certificates such as theft, loss, or damage.
What crucial role does a Demat Account play?
A Demat account plays a very crucial role in the financial investment of investors such as:
- Simplified transactions:
- Efficient buying and selling: With the help of a Demat account the process of buying and selling a small-cap mutual fund becomes simple for the investor. When an investor buys a small-cap mutual fund it gets credited to the Demat account of the investor electronically. Moreover, selling a small-cap mutual fund is also very straightforward and its transactions are executed electronically.
- No Physical Certificates: Traditionally, when an investor buys a mutual fund they used to get a physical certificate. Managing such a physical certificate can be very cumbersome and it may also be prone to loss or damage. With the advent of a Demat account, all such hassle is eliminated as all records and documents are digitally recorded.
- Enhanced Security:
- Reduced Risk of Fraud: Since every records and transactions are recorded electronically the risks of fraud are reduced significantly. Moreover, all digital transactions are also encrypted and secured. As such all investments of the investor are protected from unauthorized access.
- Ease of Tracking: With the help of a Demat account investor can track and manage their small-cap mutual fund very easily. They can also easily monitor their portfolio, track their performance, and receive updates on transactions from the secure online platform.
- Simplified Record:
- Centralized Storage: All the small-cap mutual fund holdings of the investor are stored in a single demat account. As such, it becomes easier for the investor to manage and review their investments. With a centralized system, the process of record-keeping and financial planning becomes a lot easier.
- Streamlined Reporting: A Demat account also gives consolidated statements and reports to the investor. Investors can easily access those reports if they need them for tax purposes and review their performance. Hence, a demat account helps in maintaining a clear and organized record of their investments.
- Reduced Cost:
- Lower Transaction Cost: With a Demat account the investor does not need any kind of transportation cost. Moreover, the fees of the electronic nature of the transaction are also low as compared to that of physical transactions.
Thus, a Demat account is indispensable for any type of small-cap mutual fund. By offering simplified transactions, enhanced security, and improved efficiency, a Demat account helps investors to manage their investments efficiently.