Your investment portfolio reflects your financial assets and long-term goals. To manage it effectively, you need secure and transparent ways to hold your investments. This is where Demat accounts and Statements of Account (SOA) come into play. Let’s understand how they affect your portfolio to help you make your investments organised and protected.
Why is it Important to Track a Portfolio?
By tracking your portfolio, you know exactly where your investments stand. Be it the stocks, mutual funds, ETFs, shares, or bonds. Your portfolio has details of all your assets.
How you hold your investments, i.e., through a Statement of Account (SOA) or Demat Account, can significantly affect your portfolio management. Still thinking about how? Let’s see.
Understanding SOA and Demat Account
But first, let’s decode what a Demat account and a Statement of Accounts are.
What is an SOA Account?
SOA, or a Statement of Account, is a detailed summary of all your investments in mutual funds. A Statement of Accounts is similar to your bank passbook but for your investment.
Purpose
The purpose of providing a Statement of Accounts to investors is to track the current status of all their investment holdings.
For example, if a person has been trading in mutual funds for three years and wants a detailed history of his transactions, he can get it through the SOA. This is how demat and SOA impact investment portfolios.
Features
Key features and inclusions of a SOA are:
- Folio number of the investor
- Contact and basic details of the investor
- Information about the holdings
- Details of all purchases, redemptions, and transfers
- Details of dividends
What is a Demat Account?
A demat account is like a bank account for all your stocks, bonds, or other securities investments. It ensures that all your investment-related details stay in one place. Hence, a demat account has a great impact on your investment portfolio.
Purpose
The main purpose of a demat account is to keep you in the loop and make your investments accessible at any time.
Features
A demat account includes the following features:
- Account number
- Account holder name and other details
- Information of the Depository Participant (DP)
- Details of all your holdings
- Transaction statement
SOA Account Impact on Investments
Why is a statement of account the best choice for you? How can it impact your investments? Let’s see the importance of SOA.
| Parameter | Impact of SOA on investment portfolio |
| Tracking | A statement of account makes tracking much easier for the investor. |
| Facilitate Taxation | Having the records of all transactions makes tax filing easy. |
| Verification | You can use it to verify the accuracy of transactions. |
| Serves as Proof | When you don’t have a Demat, an SOA is your proof of investment. |
Demat Account Impact on Investments
The role of demat in portfolio management is very crucial. It saves you a lot of time and energy. Let’s see its overall impact.
| Parameter | Demat Account Impact on Investment |
| Consolidation | It consolidates all your different types of investments in one place. |
| Accessible | It is easily accessible at any time you want. |
| Authorisation of activities | A demat account can immediately identify any unauthorised activity in the demat account. |
| Displays restrictions | You will be informed if any restrictions have been imposed on your account. |
SOA vs. Demat Account
Let’s see how each choice might impact your portfolio from the table below:
| Type of Account | Parameter | Actual Impact |
| Demat | Easy Transactions | Makes trading in stocks and bonds easy. |
| Less Risk | The digital aspect reduces the risk of fraud, misplacing share certificates, etc. | |
| Speed | The TAT for transactions was also reduced. | |
| Corporate Benefits | Dividends or bonus shares are automatically credited to your account. | |
| Monitoring | You can track your holdings, their performance, and their valuation anywhere. | |
| Statement of Account (SOA) | Direct Benefits | There are no hidden costs. So you get direct holding benefits. |
| Consolidation of holdings | All your mutual funds are in one place. | |
| Control | You have major control over the redemption, unlike in demat accounts. | |
| Taxation | It has a better impact on tax efficiency. |
Which One Suits You Best?
A Demat account becomes important if you are an active trader who invests in more than just mutual funds. With Dhan, you can quickly open a free Demat account online at ₹0 AMC. This includes investments like stocks, ETFs, and bonds. However, an SOA is very cost-effective if you only invest in mutual funds.
Many investors choose a demat and a SOA to have a diverse portfolio. So, remember, no matter what you choose, whether you choose an SOA or Demat account, it will strongly impact your overall investment portfolio.
Bonus Tip: Join the Dhan Made For Trade Community to learn from other investors who use Demat and SOA insights to rebalance, switch funds, or manage taxes.
