How Portfolio and Demat Account Management can Help Secure Your Future

author-img By Arina Smith 5 Mins Read 11 September 2023

Portfolio management

Portfolio management is the art and science of fund allocation across asset classes for maximising returns. It has evolved to be a specific profession, with qualified advisors for assisting investors in making investment decisions. Investors are often advised to distribute available investible surplus in different assets, to diversify risk. Diversification of risk contributes to lowering the overall risk and benefits the end investor in the long run. With dematerialisation and electronic trading, investments in shares and bonds have become simplified and fast, with trades getting executed by the second.


Broking agencies advise investors on what is a demat account, the registration and operational process. Allocation of portfolio assets and demat account management are essential steps involved in the trading process. Without an appropriate plan of investment by careful assessment of financial goals and risk profile, investors may lose instead of earning a return from investments.

What is meant by demat account?

A demat account is a one-stop destination for online trading of shares. Since the Depositories Act was passed in 1996, physical securities were converted to electronic shares, for listed companies. Investors were required to have online trading and demat accounts for trading in these shares. Electronic trading brought benefits such as speed, convenience, and secure transactions. Here are some of the ways by which structured portfolio and demat account management can aid the investor in the long run:

1. Fund allocation:

Portfolio management entails the scientific allocation of funds by the investor or a qualified portfolio manager for better returns. Returns are gauged as a probability, basis the individual risk appetite of an investor. Without a proper fund allocation process, investors may tend to be over-invested in some asset classes, while being under-invested in other high yield asset classes.

2. Risk profiling:

Investors are classified into high risk, medium risk and low-risk categories, based on their ability to withstand losses on investments. Similarly, asset classes are also classified into similar risk categories depending on the risk in investment involved. Portfolio management ensures an appropriate matching for investors with assets of their risk profiles. For example, a risk-averse investor can invest in government securities, instead of in the share market for better returns.

3. Investment goals:

Portfolio management begins with understanding the risk appetite and future goals of the investor. Smart investments are always made with a plan in mind, with certain financial goals to be achieved. Based on these financial goals, asset classes are recommended to the investor/ trader by the portfolio manager for making investments.

4. Offshore investments:

To diversify risks, investors are often advised to spread investible funds across borders by investing in offshore funds and assets. Portfolio managers and brokers advise traders on what is a demat account, and the functioning thereof in the countries invested in. This is essential as trading in most countries has shifted to the demat format for many years.

5. Customization:

Investors can customize their investments with the aid of a structured portfolio management plan. Each trader has his own set of financial goals, risk appetite and amount of investable surplus. Portfolio management brings the goals of the investor in line with his return expectations, by matching asset classes based on his risk-taking ability, to bring tailored recommendations.

6. Dynamic fund management:

Demat account management by brokers ensures a systematic flow in investment strategy. Funds are adequately invested in, based on the broker’s advice and the investors’ consent. The trading environment has grown to be very dynamic and fluid. A dynamic fund management process ensures that the portfolio doesn’t become static, or earn fewer returns than it ideally can.

7. Structured trading:

Portfolio and demat account management help in the structuring of investments, by planning fund allocation, calculation of risk profiles, analyzing returns trends and taking a corrective course of action for the future. This ensures higher chances of meeting investment goals at the right time for the investor.

8. Analysis of trends:

The demat account can be accessed for every trade undertaken in the past. A company wise, date wise and amount wise breakup of funds invested in earlier can be analyzed to forecast future price movements or future strategies for investment. This was not possible in the earlier times of physical share trading.

The future is an uncertainty and this is exactly why smart investors allocate savings to invest for earning returns. Meeting financial goals like children’s’ higher education, children’s’ marriage, retirement goals and other financial goals are some of the key reasons for investment. A scientific method of investing is necessary, for a smooth investment experience for the investor.

The professional management of funds brings some respite to the investor, as brokers and portfolio managers are professionally qualified and technically competent to offer sound investment advice. They aid the investor in end to end fund management and in earning the desired returns in a defined time frame.

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Arina Smith

I enjoy writing and I write quality guest posts on topics of my interest and passion. I have been doing this since my college days. My special interests are in health, fitness, food and following the latest trends in these areas. I am an editor at OnlineNewsBuzz.

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