Demat Account myths and facts to be aware of

Up to 1996, investors had to store their investment certificates physically. Now that the world has gone digital, it has become possible to save your investments online. This is possible through an instrument called Demat Accounts. Demat, short for dematerialisation, the account holds all your investments electronically. Such accounts become crucial to open if you consider investing in Sensex today.
But before you do, you need to be aware of the account thoroughly. There are numerous facts and myths surrounding them. Let us clear them all.
Myth: You can only hold shares in a Demat
Most investors are under the misconception that Demat Accounts only hold shares and cannot store other securities in this account.
Fact: Demat is a multi-purpose account
Demat Accounts are rather multi-purpose accounts wherein you can hold all your market instruments. This includes shares, Mutual Funds, Exchange-Traded Funds, Money Market Securities, and so on. This account allows you to avail yourself of all the dematerialisation facilities.
Myth: Demat accounts are unsafe
This myth owns to the fact that Demat Account is operated online and exposes information about your investments to miscreants.
Fact: Trading through Demat is entirely secure
The Demat Account service providers or depository participants fall under SEBI and are known to provide secure firewalls. You need to log in to your account each time you wish to make a transaction. Some intermediaries also require a one-time password each time you log in. There are other authentications that you need to complete before every transaction.
Myth: You can open only one Demat Account
Investors assume that they can operate only one Demat, which may become inconvenient eventually.
Fact: You can open multiple accounts
There are no limitations on the number of Demat Accounts you can access. This is helpful for investors who prefer investing in a range of instruments. For instance, you can maintain your shares in one Demat and open another for your Mutual Funds.
Myth: You need not pay anything for opening Demat Accounts
Some investors believe that Demats freely accessible and you can easily open them online without paying any charges.
Fact: You need to pay account opening and maintenance charges
DPs such as banks and other brokers charge account opening fees and annual account maintenance charges when you decide to open a Demat Account. This myth about Demat Accounts stems from the fact that some brokers do not levy any charges for opening the account, but this is merely a customer acquisition tactic. If you are not charged an account opening fee, you may be quoted a higher annual account maintenance cost, which means you end up paying higher costs at the end of the account opening process.