Can I Open Multiple Demat Accounts: It is believed that the Himalayas are the gateway to heaven. It is not surprising since it is home to the tallest mountain in the world.
While that may be true, one thing we can say is that a Demat account is a gateway to investing. One of the very first steps to becoming a true investor is to open and maintain a Demat account.
Buying stocks is not what it used to be in the past. Instead of physical certificates as proof of ownership, you now get to buy stocks from anywhere in the country, using this special account.
“What Is A Demat Account?”, “How Can I Open a Demat account?” “Can I open multiple Demat accounts?” – These are just a few of the questions I had when I first started investing.
If you find yourself asking the same questions, then this article can provide you with the answers you need.
Demat Account – Meaning & Features
A Demat account is a necessary requirement for your entry into the stock market. It doesn’t matter if you are a trader or an investor – having a Demat account is the only way a person can directly participate in the stock market.
You can open a Demat account with various brokers like Zerodha and Groww. There are certain steps that have to be followed by the broker, including the KYC (Know Your Customer) process.
Can I Open Multiple Demat Accounts?
Yes, you can open multiple Demat accounts. It is completely legal and possible to open more than one Demat account.
You do need to keep in mind that the brokers charge annual maintenance fees, and having multiple accounts can accumulate the cost over time.
Especially if you are not using the accounts, at which point you would be burning through cash for inactive Demat accounts.
Things To Consider When Having Multiple Demat Accounts
- Traders usually have multiple Demat accounts across different brokers. However, you can only open one Demat and trading account per stockbroker or depository participant.
- Having multiple accounts allows investors and traders to maintain clear differentiation between accounts for trading and investing.
- Each broker has their own account maintenance fees, brokerage fees, margin costs, etc. This means maintaining multiple accounts will have additional costs simply by owning them.
- Similar to how banks close down inactive accounts, so do brokers. So while you can open multiple Demat accounts, it is important to keep the accounts active or your broker will end up freezing them.
Pros Of Having Multiple Demat Accounts
Here are some advantages of holding multiple Demat accounts:
1. Separate Investing And Trading Accounts
By having multiple accounts, traders can keep separate accounts for their trading purposes and investments.
2. Easy To Track
Having different accounts, after giving each account a specific purpose, makes it easy to track investments as well as trading positions.
3. Access To Multiple Reports
Each broker has a unique service that they provide to their clients. It could be stock recommendations, insider deals, industry reports, etc. When you have accounts from various brokers, you will have access to all these useful reports and information, letting you make better investment decisions.
Cons Of Having Multiple Demat Accounts
Here are some disadvantages of holding multiple Demat accounts:
1. Extra Cost
Having more than one Demat and trading account will be more expensive as you have to incur annual maintenance charges (AMC), irrespective of using the account. Beyond that, you also have individual charges based on trades and investments.
2. Account Closure/Freezing
Accounts that are inactive for a long period of time are frozen by brokers, similar to how banks freeze or close inactive accounts. To avoid this, traders and investors should stay active in all their accounts.
Also Read: Can A Minor Open A DEMAT Account In India?
In Closing
Many participants in the market, specifically traders, question themselves – “Can I Open Multiple Demat Accounts?”
This is understandable as their activity in the market is intense and can get overwhelming when managing their trading positions as well as their investments. Do you think it’s ideal for new investors to have multiple Demat accounts? Let us know below!
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