One of the most important facets of financial planning is investing. In order to create long-term wealth from your earnings, it is pivotal to invest your income into diverse and profitable avenues. The investment options you select must be in line with your long-term life goals, financial goals, expected earnings and obligations, and risk tolerance. You can opt for conventional investment options such as bank deposits or market-linked investment vehicles such as shares and mutual funds. Should you wish to invest in the securities market in India, you must open a demat account and a trading account. 

In this article, we shall discuss how investing through a demat and trading account can help you create wealth from your savings in the long run. 

Measures to build long-term wealth by investing through a demat and trading account 

• Invest in line with your goals: Wealth creation through long-term investing requires substantial clarity on your investment goals. You must, therefore, ascertain what type/s of financial assets you wish to invest in and in what proportion. Your desired risk exposure is also a key element in the selection of securities for your portfolio as well as the allocation percentage. The higher the clarity you have on your investment goals and risk appetite, the more likely you are to choose securities that align with your long-term plans. 

• Choose securities from companies with strong fundamentals: Once you have opened a demat account and trading account, you can invest in the securities issued by various companies spanning across a wide array of sectors. It is pivotal to choose companies with strong fundamentals and market standing, particularly if you intend to hold the investment for a long time and not liquidate it when the earliest opportunity for profit arises. 

• Buy and Hold: One of the key pillars of long-term investing and wealth creation is holding tight to your investments. Once you have invested in a particular security, say, the equity share of a leading pharmaceutical company, you must retain said investment for a long time without being swayed by temporary fluctuations in the fortunes of the company and its market standing. Since your shares (and other securities) are held in a demat form, you need not worry about safe storage or loss of ownership certificates. 

• Do not put all your eggs in the same basket: Another effective strategy to build long-term wealth through investments made via a demat account and trading account is diversification. One of the best features of modern-day demat accounts is that you can keep various types of securities in the same account, ranging from equity shares to bonds and mutual funds. As such, you need not open multiple demat accounts to store different types of financial assets. Portfolio diversification across asset classes and sectors is universally considered an excellent approach to mitigate risk and enhance the chance of return. 

• Leverage the available market information: When you open a demat account and trading account, you get access to the stock broker (or depository participant's) trading platform. In addition to the current market prices of various securities, you can also access insightful market reports and trend analyses on such platforms. You can potentially utilise the information contained in those reports to draft or modify your investment decisions. 

• Keep reassessing and recalibrating your portfolio: Opening a demat account and using it to store your investments grants you a high degree of access and control over your investment portfolio. At any point in time, you can check the asset allocation in the portfolio as well as the gains and losses earned on various individual assets. Such a level of visibility can help you recalibrate your portfolio on a timely basis.

The bottomline

It is easy to open a demat account and trading account online. Once your accounts are operational, you can use them to invest in various securities as per your investment plan. You can access your investment portfolio at any time and make the necessary changes in it. The whole process of investing through a demat and trading account is transparent, cost-effective, and seamless, and can help you in the pursuit of long-term wealth creation.