Disclaimer: All investments are considered high risk. Therefore, you should consult a professional before investing in anything. This article and its content are for general information purposes only and do not constitute financial advice in any way.
Over the last few decades, the Indian stock markets have been performing extremely well and retail and institutional investors have made a killing. There appears to be a surge in the opening of demat accounts as more retail investors have realized that with prudent investment strategies they can build their financial health and create wealth. The best part is that this trend is not just in metropolises but even investors from second- and third-tier cities are joining the investment bandwagon. Naturally, there is a huge demand for demat accounts as these accounts are a necessity. But the big question is why more and more Indians are opening demat accounts. It is interesting to find out more about the sudden spurt in the opening of demat accounts.
The Rise in Demand for Demat Accounts
In the first quarter of 2019, there were approximately 3.6 crore demat accounts in India. Behavioral psychologists did not notice any trend that would lead to an increase in these accounts. Nonetheless, with the pandemic striking India and the subsequent lockdowns, the number of demat accounts increases to 7.7 crore by the end of 2021.
People were homebound during the pandemic and could not go out. As a result, they had a lot of time on their hands. While some people took up hobbies that would keep them busy and entertained, others decided to throw their lot into the stock markets and open trading account, which usually comes clubbed with a demat account.
The Securities and Exchange Board of India (SEBI) has been maintaining careful records of how many demat accounts have been opened and their records found that from September 2021 to October 2021, the number of demat accounts increases by 5%, from 7.03 crore to 7.38 crore. This growth in demat accounts has been quite consistent and more people are using the internet to find out how to open demat account online.
Reasons Why Indians are Opening Demat Accounts
The main reason to open demat accounts is undoubtedly to invest in the stock markets. These accounts allow investors to hold on to their assets in digital form and allow them to buy and sell shares using their trading accounts.
However, the spurt in demat accounts can be attributed to the lockdown that enabled people to educate themselves and learn more about investing. Armed with knowledge, a lot of people decided to take advantage of online trading apps and brokerage houses to maintain financial health.
Most people realized that they can get higher returns if they enter the stock markets. These returns are better compared to what they would have got if they had fixed deposits or invested in real estate and bonds.
It is also prudent to realize that many people lost their jobs during the pandemic and the numerous lockdowns that occurred as a result. These individuals were looking for a source of income and many turned to the Indian stock markets that have been steadily performing. The records show that it was mostly young people and millennials who lost their jobs during the pandemic and keeping in line with the global trends, many of these young investors opened demat accounts to supplement their existing incomes or make stock market investments their only source of income.
In fact, records from major brokerage houses reveal that nearly 75% of new demat accounts have been opened by potential investors who wish to trade for the first time and most of them are under the age of 30.
If you are keen to build and grow your wealth, the Indian stock markets offer the best opportunities. That is a good reason to open a demat account and earn profits just like so many other Indians. It is best to find a reputable brokerage house and take advantage of the investment strategies that their experts offer.
Read also:- What is Forex Trading?