There is no stock market trading without a Demat account. It’s an absolute necessity to open a Demat account with a registered Depository Participant (DP) and then and only then can you invest in the stock market. But one associated query that has relevance is: How many Demat accounts one can have?
Further, the legal quotient behind owning multiple Demat account is something to ponder. And if it’s possible to have more than one account then exactly how many Demat account one can have in India?
Can I Have Multiple Demat Accounts
In India, it is possible to have more than one Demat account. Additionally, there is no such limit on the total number of accounts an investor can own.
But this doesn’t mean that there aren’t any regulations or rules be considered before thinking of opening multiple Demat accounts.
SEBI commands that to open more than one account, the broker has to be different each time. This means that one cannot own more than one Demat account with a given stockbroker.
Also note that to open any number of Demat Accounts, it is required that an investor or trader possesses a valid PAN card. Apart from this, there are different documents required for Demat account opening to validate your identity and address in the stock market.
Benefits of Multiple Demat Account
Wondering why one looks for opening multiple Demat accounts?
This could be due to many reasons like:
- Gaining better trade experience in different segments
- To reap the benefit of trading at the low brokerage
There are brokers offering zero charges for delivery but do not provide better charts for technical analysis for intraday trading.
On the other hand, there are trading apps specifically designed to provide a better experience in the Futures and Options segment but charge high fees for delivery and other segments.
But with multiple Demat accounts, one can get access to multiple trading apps that eventually helps traders to trade smartly across segments.
In all having more than one account has its benefits as well as limitations. Let’s first see why many investors find it suitable to have many Demat accounts:
Multiple Research And Advisory Resources
With more than one Demat account each with a different broker, you get a mix of research and advisory from each of these brokerage firms. This helps you in forming better trading decisions.
A comparative analysis of these resources will help in avoiding losses for an investor, especially the one who has minimal knowledge of the stock market.
This is just like the concept of the second opinion. So before you invest in big volumes for the long term, these resources come in handy.
Enhancing the Investment Portfolio
Many investors who open multiple Demat accounts, open one with a full-service broker and the other with a discount broker. In this way, they receive the best of both worlds and this helps them enhance their investment portfolio.
Each of these types of brokers provides some unique features and services. With a full-service broker, one gets access to useful research tips. On the other hand, the Discount broker offers highly affordable brokerage charges or plans.
In this way, to have two Demat accounts with each of these types can really prove to be favorable in the long run for an investor who has just stepped into the stock market world.
Multiple Demat Account with One Trading Account
For easier management of funds, it’s advised to open only one trading account but multiple Demat accounts each with a different broker.
You can start by Demat account opening online with Choice easily by following some simple steps.
Multiple Demat Account Disadvantages
Every coin has two sides. Multiple Demat accounts can benefit investors and traders, but some disadvantages cannot be ignored.
Now, these disadvantages revolved around high charges, mismanagement, freezing, and lots more.
Let’s discuss all these drawbacks one by one in detail.
Multiple Demat Account Charges
Not all Demat account opening is free of cost but some are pretty expensive. And even if one does bear the cost of opening a Demat account, there’s the excessive AMC to think about too.
On top of demat account AMC charges, several stockbrokers also charge hefty transaction charges hence it becomes quite unprofitable to indulge in Intraday Trading.
With multiple Demat accounts the total account charges get added, for example:
AMC Account 1 + AMC Account 2 + Account Opening Charges 1 + Account Opening Charges 2
The above is just an overview of how multiple accounts increases your demat account charges in having more than one account in the share market and can drain your resources very quickly.
Multiple Demat Account Mismanagement
Although seasoned traders easily manage two different accounts, new investors find it difficult to properly divide their precious time into multiple Demat accounts. This can lead to acute mismanagement of funds and investment plans.
Multiple Account management is time-consuming. So those investors who want to trade on the go, or just are looking at stock trading as a part-time thing, aren’t able to invest ample time in monitoring all their Demat accounts.
Idle Demat Account Freezing
Initially, many traders are attracted to opening multiple Demat accounts especially when a new stockbroker enters the market with very appealing deals. But most of these accounts are never used and therefore freezing of idle accounts is inevitable.
Yes, one can have more than one Demat account, and this practice has several advantages but the approach has to be such that the limitations mentioned above are avoided at all costs.
And it’s not just the question of opening multiple Demat accounts, more importantly, an investor should be more worried about what broker they must choose and how that broker will serve their trading goals and objectives.
The Choice is a trustworthy and customer-friendly broker with advanced technological trading tools.
You can open a Demat account with Choice very swiftly and without worrying about any unnecessary expenses or taxes.