Do you know? In the first two months of FY 2025, 81 lakh new investor accounts were added to the mutual funds industry. This rapid growth reflects how more people are managing and growing their wealth.
To start investing, you need the right type of account. Understanding the differences between a Demat account and a Statement of Account (SOA) can help you choose wisely.
Let’s explore Demat vs SOA and see which one suits you best!
What is a Demat Account?
A demat account is an electronic account where you can store your shares and bonds. The purpose of a Demat account is to eliminate the need for physical share certificates. As a result, a Demat account makes buying, selling, and transferring shares easier for you.
Advantages of a Demat Account
A demat account comes up with the following advantages:
1. Easy Access for Investors
An investor can easily access a Demat account through net banking systems. It eliminates the need for physical visits to brokers or banks. You can monitor holdings, portfolio performance, and transactions 24/7 from any device.
2. Simple Share Transfer
One of the biggest advantages of a Demat account is the ease of transferring shares electronically. Transfers happen electronically, reducing paperwork and delays. It also allows for faster settlement and more efficient portfolio management.
3. Makes Investments Digital
When you choose a demat account, you can easily make the entire process digital. This includes digital records of buys, sells, and dividends. It supports paperless investing, helping reduce risks like theft or loss of certificates.
4. Makes Trading Easier
A Demat account makes trading in securities easier with the convenience of remote access. You can buy and sell shares in real time through integrated trading platforms. This seamless experience helps you respond quickly to market opportunities.
5. Investors Can Secure Loans Against Securities
You can easily use the securities in your Demat account to get a loan. It allows you to access funds without liquidating your investments. Banks offer competitive interest rates against such pledged securities.
What is a Statement of Account (SOA)
A Statement of Account is an account you open with any Asset Management Company (AMC). It is a document with all the details of your transactions and holdings. The AMC will regularly send you a statement of account electronically or physically.
In this case, you can easily withdraw your mutual fund unit like you would if you made a simple bank withdrawal. You must mention the units and the amount you want to withdraw.
Benefits of Statement of Accounts
Statement of Accounts also comes with several benefits.
1. Easy Portfolio Management
A statement of accounts is a document with all your mutual fund investment details from various sources. So, as compared to a demat account, SOA makes it easier for you to manage your investment portfolio.
2. Simplifies Tax Filing
Income-generating investments can make tax filing tricky. A Statement of Account provides a clear view of all your transactions, making it easier to calculate taxes.
3. Eases Compliance and Monitoring
Each year, investors have to report their holdings and transactions. A statement of account will give you all the information you need to add to these reports.
Demat vs. Statement of Account: Main Differences
Let’s compare the pros and cons of a Demat account and an SOA in the table below:
| Parameters | Demat Account | Statement of Account (SOA) |
| Format of account | These accounts are electronic in nature and hold securities certificates in electronic format as well | Follows a traditional paper-based format |
| Issuing Authority | Managed by Central Depository Services Limited (CDSL) or National Securities Depository Limited (NSDL) | Managed by the Asset Management Company (AMC) |
| Fees applicable | You may need to pay for account opening and maintenance | There are no fees related to maintenance or account opening for an SOA |
| Purpose | Stores all your holdings in one place, in an electronic format | States all your transaction history, portfolio number, name and valuation details |
| Trading | It makes trading much easier | You will have to handle your transactions manually |
| Redemption of securities | You can buy or sell in whole units | You can redeem any amount in rupees |
| Best choice for | Investors who are active and rely on timely online updates about their transactions. | Investors who prefer keeping a physical record of their investments. |
| Loan disbursement | Loans against demat accounts can be used to buy securities | A loan against SOA is applicable for any purpose |
Which Investment Mode Should You Choose? (Demat vs. SOA)
The right choice depends on how you invest and what works best for you.
- Go for Demat if you invest in stocks, bonds, or ETFs and want everything in one place. It also lets you trade listed mutual funds on the stock exchange. Just keep in mind there are maintenance and transaction fees.
- Stick with SOA if you only invest in mutual funds and prefer dealing directly with fund houses. It’s free, simple, and great if you don’t need to track other securities in one account.
Already have a Demat account? Adding mutual funds might be easier. Looking for a no-cost, hassle-free option? A Statement of Account (SOA) might be the better choice.
Choose the Right Investment Account Wisely
If you prefer investing only in mutual funds, Demat vs SOA leans in favour of SOA as the better and cheaper option. However, if you want a diverse portfolio with different securities, Demat is the way to go! You can open a free Demat account with Dhan at ₹0 AMC.
