Opening a demat account is crucial for anyone looking to invest in bonds, stocks, or mutual funds. But once you have opened your account, keeping it safe from fraud becomes just as crucial as growing your investments. Whether you are using financial instruments like an online SIP calculator or investing directly in stocks, following best practices for security is crucial.
Here’s a detailed breakdown of how you can keep your demat account secure and avoid falling prey to fraud.
1) Enable two-factor authentication (2FA)
One of the simplest yet effective ways to safeguard your demat account is by allowing two-factor authentication (2FA). This security feature ensures that no one can sign into your account without another level of authentication even if they gain access to your password.
Most brokerage platforms that allow you to open a demat account offer 2FA. Typically, this involves receiving a one-time password (OTP) through email or SMS, which you must enter along with your usual password to access your account.
For instance, you may sign in to your demat account and be prompted to enter an OTP sent to your phone. This additional step is essential as hackers, even if they crack your password, will not be able to bypass the OTP that you alone can access. Always ensure your contact details are up to date so that you get these OTPs without delay.
2) Use unique and strong passwords
While enabling 2FA is crucial, the first line of defence is still a unique and strong password. A weak password is easy to guess, particularly if it includes predictable info like your name, phone number, or date of birth. Instead, use a mix of lowercase and uppercase letters, numbers, and symbols to create a password that is tough to crack.
For example, avoid passwords like “India123” or “Password2024”. Instead, use something more complicated, like “InD!@2024$ec!”. This kind of password is harder for fraudsters to guess or breach. Moreover, you must update your password regularly and avoid using the same password across multiple platforms.
3) Monitor your account periodically
Just as you would monitor your bank accounts, keeping a close watch on your demat account is essential. Many brokers provide email or SMS alerts for every transaction in your demat account. These alerts can be your first line of defence against fraud. If you notice any unauthorised or unfamiliar activity, you must instantly notify your broker.
Assessing your demat account statements and transaction record periodically – at least once a month – helps you catch fraudulent activity early. Also, ensure you verify these records with investments. Any discrepancy could be a sign of something amiss, so do not ignore any red flags.
4) Avoid public Wi-Fi networks
Accessing your demat account over public Wi-Fi can leave your sensitive data vulnerable to hackers. Public Wi-Fi networks, like those in coffee shops or airports, are typically unsecured, making it easier for cybercriminals to intercept your login credentials. This can give them access to your demat account and permit them to perform unauthorised transactions.
Whenever you require checking your account or completing transactions, it is better to use a private internet connection. If using public Wi-Fi is necessary, consider using a VPN to encrypt your network and protect your data. This adds an extra security layer, ensuring that your financial and personal information stays safe.
5) Beware of phishing scams
Phishing is a common tactic by fraudsters to steal personal details by pretending to be legitimate entities. You may get a message or email claiming to be from your broker, asking you to click on a link and enter your account details. These emails often look official, but they are tailored to trick you into giving away sensitive data.
To safeguard yourself from phishing scams, never click on suspicious links or provide your login details unless you are sure of the source. Always authenticate the email or message by contacting your broker directly. Genuine brokers never ask for your OTP or password through SMS or email.
6) Keep your devices secure
Make sure that your smartphone, computer, or tablet is always updated with the latest patches and antivirus software. Outdated software can have vulnerabilities that hackers exploit to gain access to your accounts.
Moreover, avoid storing your login credentials on your browser or device. While it may be convenient to save passwords for quick access, it poses a considerable risk if your device is compromised. Always log out after using your demat account, particularly on shared or public computers.
Ending note
Keeping your demat account safe from fraud is not a one-time activity but an ongoing effort. By following these six tips – allowing two-factor authentication, using strong and unique passwords, periodically monitoring your account, avoiding public Wi-Fi, being aware of phishing scams and securing your devices – you can considerably lower the risk of fraud.
With the increasing number of investors, it is crucial to prioritise the security of your demat account, just like you would with any other financial asset. Note that a safe account ensures a secure financial future, particularly if you are using online tools like the SIP calculator to plan out for your long-term goals.
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