Demat Account: How to invest in stocks via SIP? Here’s a step-by-step guide

Systematic Investment Plans, or SIPs, are becoming a popular choice for retail investors seeking to grow their wealth steadily. SIPs are traditionally associated with investing in mutual funds. However, SIPs are now also applicable to investing in stocks.

While a demat account is not necessary for mutual fund investments, it is important to open a demat account for direct investment in stock market.

SIP in stocks has been possible due to the use of demat accounts. Let us understand in detail how to leverage your demat account for SIPs in stocks effectively. Firstly, let us understand what a demat account is and what an SIP in stocks is.

What is a Demat Account?

A demat account, or a dematerialised account, is an electronic account used to store stocks and other securities in electronic form. It eliminates the need for physical share certificates and simplifies the process of trading and investing in stocks.

Also Read: Demat Account: Benefits of handling mutual fund investments through demat

What is SIP in Stocks?

SIP in stocks is a method of investing a fixed amount in selected stocks at regular intervals. This helps benefit from rupee-cost averaging and the power of compounding.

How to Use Demat Account for SIP in Stocks?

Stock market investing becomes easier with the use of demat accounts. To start an SIP in stocks, you need to open a demat account. Below are the steps on how you can use demat account for SIP in stocks:

Choose a Broker: You need to select a reputable brokerage firm that offers the facility of SIP in stocks. The online platform of the broking firm should be user-friendly for seamless transactions.

Open a Demat Account: As mentioned earlier, you must open a demat account for SIP in stocks. You need to submit all the required documents for opening a demat account.

Also Read: Demat Account: How to resolve disputes related to transactions? Here are 6 steps to follow

Select Stocks: You then need to identify stocks for investment. A thorough research or professional advice is must to identify the stocks for SIP. The selected shares should align with your investment goals, risk appetite, and time horizon.

Set SIP Frequency and Amount: The next step is to determine the frequency of the SIP investment. This can be the monthly, quarterly, etc. Further, you need to select the amount for investing in each stock through SIP. This amount gets automatically debited from your bank account and the shares will get credited to your demat account.

Initiate SIP: After logging in to your demat account, navigate to the SIP section and then initiate SIP for the selected stocks. Here, you need to specify the investment amount, frequency, and duration of the SIP.

Monitor and Review: It is essential to regularly monitor the performance of your SIP investments and review their progress. You can change or adjust your SIP portfolio according to the changing market conditions.

Also Read: Demat Account: What are the charges associated and how to monitor them?

Benefits of SIP in Stocks via Demat Account

– Disciplined Investing: SIP in stocks promotes a disciplined approach to investing by encouraging regular contributions, regardless of market fluctuations.

– Diversification: It offers the benefits of diversification as the money is invested in multiple stocks in the portfolio through SIP which spreads risks.

– Convenience: Using demat accounts for SIP in stocks offers convenience and flexibility as it allows managing SIP investments online from anywhere, anytime.

In conclusion, using demat account for SIP in stocks offers a systematic and hassle-free approach to wealth creation. You need to stay informed about market trends and evolving environment to achieve your financial goals effectively.

Also Read: Demat Account: How to rematerialise securities? Here’s a step-by-step guide

FAQs

Q: Can I change my SIP amount or frequency?

A: Yes, you can change or modify SIP details, including the investment amount and frequency.

Q: Are SIP investments in stocks suitable for beginners?

A: Yes, SIP in stocks can be beneficial for beginners but it is essential to understand the risks involved and seek professional guidance.

Q: What happens if I miss an SIP installment?

A: If you miss an SIP installment, it may not have a significant impact, but consistent investing is key to maximising returns over the long term.

Q. Is a demat account mandatory for investing in stocks?

A. Yes, opening a demat account is mandatory for investing in stocks.

Q. Do SIPs in mutual funds require a demat account?

A. No, SIP in mutual funds does not require a demat account.