Difference Between Brokerage Account vs Demat Account

For beginners who are thinking about investing in the equity markets, the terms Demat Account, Brokerage Account, and Trading Account can be confusing. To invest and trade in the stock markets, you’ll need a Demat account and a Brokerage Account. While both of these accounts are required, their usefulness differs. 

Nowadays one additional and profitable option is to start your own sub broking franchise with any renowned broker at a discount sub broker franchise cost. This article would help you in differentiating between them which might assist you at the beginning of your stock market investment experience.

What is a Brokerage Account?

A brokerage related account or a trading account is one that allows you to purchase and sell securities such as equity, mutual funds, as well as bonds.  A variety of registered brokerage providers provide easy and advanced services to open a brokerage account along with their traditional services to open a Demat Account. Among these brokerage firms are Full-Service stockbrokers to Minimum-Cost Internet Discount brokers.

What is a Demat Account?

Your shares are held in a Demat account, also known as a Dematerialized Account. It is the first and the key step for investing in stock markets and you can easily open a free Demat Account with any reputed broker. Your shares are converted from a tangible to a digital form via a Demat account. This is the account where you keep all of your purchased equities, such as –

  • IPOs
  • Mutual Funds
  • ETFs
  • Bonds
  • Stocks
  • Futures & Options
  • Other Securities

Like a bank account, every Demat account has a unique account number. With 0 balance, you can open a Demat account online.

Brokerage Account vs Demat Account

CATEGORY BROKERAGE ACCOUNT DEMAT ACCOUNT
Utility It is basically used for transactional purposes. A Brokerage Account is used to buy/trade equity and securities. A Demat Account is used to keep/hold your newly purchased stocks and assets.
Operational The Brokerage account helps you to monitor the market’s ups and downs by posting expert thoughts on a regular basis. It even lets you access it regardless of whether the marketplace remains open or closed. The Demat account shields you from unpredictably high credits and debits as they allow you to freeze the transactions for a specified period of time.
Transactional To purchase/sell different securities, funds must be sent into and debited from your bank account associated with your brokerage account. It is possible to open a Demat Account without purchasing any stocks or securities. The account doesn’t need you to keep a balance of shares around any given point in time.
Scope A Brokerage account gives you instant access to all of the country’s stock exchanges. Simply by possessing a Demat account, you gain the ability to automatically receive advantages when a firm or organization delivers dividends, interests or returns.
Ease of Use Having a Brokerage Account gives you the leeway to trade on a variety of stock exchanges and easily move dollars and equities. You can trade from the comfort of your own home or while commuting since you can access your Brokerage account using a variety of devices such as a phone, tablet, laptop, or computer. With a Demat account, you can transform electronic equities and securities into their physical format in a matter of minutes, and vice versa.

Conclusion

In stock market investing, Demat and Brokerage Accounts serve varied purposes. A Demat Account is solely for the purpose of holding the assets that you purchase. The physical shares are simply converted to a digital form. A Brokerage Account, on the other hand, permits you to purchase and sell stocks. This account allows you to trade assets before them reaching your Demat and Brokerage Account, where they’ve been held until sold. One additional profitable way is by starting your sub broking franchise with any reputed broker at a discount sub broker franchise cost.