A demat account serves as an online platform using which an individual can invest in various securities like shares, debentures, commodities, ETFs, and mutual funds. One can open an online trading account by completing various registration formalities and submitting essential documents like identity and income proofs. Even minors can open a demat account to start their investment journey. Minor demat account opening online is easy and hassle-free with the assistance of professional companies who offer trading account opening services for minors. Following are some benefits of a minor demat account that can prove beneficial for minors and their legal guardians alike:
- Financial literacy:
A minor demat account serves as a first step in the direction of financial literacy for minors. They understand the importance of investing early, managing finances, and earning returns through small investments. Minors feel motivated to save money and invest the same over a long period to get exponential returns in the future. The process of opening a demat account and conducting financial transactions serves as a hands-on experience in the field of financial knowledge and literacy.
- Early investment and exponential returns:
Another great benefit of a minor demat account is the returns that minors can get through small investments made early in their age. A minor under the guidance of a responsible and experienced guardian can select the best security like Mutual Funds or shares. This can help generate great returns over a long period. Small investments at an early age using a minor demat account can help in the accumulation of a large financial Corpus.
- Management and control:
A minor demat account can be operated and managed by a legal guardian who is responsible for every transaction like buying and selling also securities. An experienced investor manages every transaction which time reduces the chances of unauthorised use. Moreover, they can make financially sound and responsible decisions on behalf of the minors which further can reduce the chances of any losses. The legal guardian can control the minor demat account and diversify the investments by selecting shares, debentures, Mutual Funds, bonds, and various other securities.
- Tax Benefits:
Investments through a minor demat account can even help legal guardians get tax benefits. Profits generated from investments through a minor demat account can be claimed as a deduction allowing the legal guardians to reduce the tax obligations.
- Experienced investments:
A minor through years of investing through a minor demat account gets sufficient experience regarding investment avenues and taxation. With complete knowledge about various investment options, their benefits, and their disadvantages, minors upon attaining adulthood can make sound investment decisions on their own.
Conclusion
Now you know what is demat account for minors, an online trading app can serve as the best solution for opening it. With access to necessary information and the availability of diverse investment options, minors with the assistance of their legal guardians can start investing early and get the benefit of compounding over a long period. A minor demat account can therefore serve as the best decision a parent can take to secure the financial future of their children.
