If you are about to open a demat account, then you should also understand the importance of reviewing your demat ac holdings on a regular basis. Bear in mind that you may be using the best trading app, but you may still find a discrepancy in your demat ac holdings.
A discrepancy can be of several types. For example, you might have purchased certain shares; however, your demat account may not show them, which falls in the category of missing shares.
Or, your demat ac statement may have incorrect share quantities. Such discrepancies might arise due to clerical mistakes, technical glitches, and in some cases even a fraud. Whenever you find such discrepancies, you should contact your broker immediately and ask for clarification.
Apart from discrepancies, there are many other reasons why you should review your demat ac holdings regularly.
- Monitor your investments: If you do not track your investments, you will have no way of knowing how they have performed. Besides, only by tracking investments can you take correction active, if and when needed. Hence, you should regularly review your demat ac holdings.
- To prevent fraud: At times, it may happen that certain unauthorised transactions are conducted through your account. To prevent such frauds from happening, you should keep an eye on your investments in a demat ac. You can set reminders so that you track your investments once every few days/weeks as needed.
- Track bonuses and dividends: Often companies announce dividends or bonuses, which can have a significant impact on your investments. Hence, you should review your investments so that you can track such corporate actions. Besides, by tracking such corporate actions, you will be able to better calculate the return on your investments.
- Make portfolio-related decisions: Whether you are a long-term investor or a day trader, you should track your investments regularly. Only by doing so can you make portfolio-related decisions efficiently. If you do not track your portfolio, you will not know how much return or loss you have made. In such a case, you will not be able to make correct decisions in terms of buying, holding, or selling a security.
- Calculate capital gains and taxation: When you buy or sell securities, you will either make a capital gain or incur a loss. If you make a profit, you will have to pay a tax on it, which can be either short-term or long-term capital gains tax. By tracking your investments, you will get a better grip on capital gains and tax liability.
- Identify poorly performing investments: You will be able to identify poorly performing investments by regularly tracking your demat ac holdings. At times, an investment may not perform sub-optimally; however, it may no longer suit your investment objective. Hence, you may have to remove it from your portfolio. If you track your investments regularly, you will be able to identify such investments.
- Be disciplined about your investments: Investors often make emotional decisions, especially when the stock market moves up or down considerably over a short period of time. However, if you follow a system of tracking your investments regularly and identify your entry or exit points, then you will be disciplined about your investments and not let emotions get the better of you.
Conclusion
It is true that you should review your demat ac holdings regularly. However, for this purpose, you should open a demat account with a broker who allows you to track your investments efficiently.For example, Bajaj Broking’s website and app help you track your holdings real-time, which lets you make timely decisions regarding your portfolio. In fact, if you are trying to find the best trading app, you must check whether it allows you to track your investments easily or not.
Read Also: How to Manage Multiple Demat Accounts Effectively?
