Can you have Multiple Brokerage Accounts: The first step while starting your investment journey in the stock market is setting up a brokerage account. This account acts like an investment vehicle that transports your money to investments.
Through these brokerage accounts, the brokers will execute trades on your behalf and along with this service, some top brokerages offer personalized services that can help you in your investment journey.
In some ways, these brokerage accounts behave similarly to bank savings or checking accounts. In this sense, you can transfer money in and out of them without any restrictions.
But here, the question arises of whether you can open multiple brokerage accounts similar to opening a bank account.
In this article, we will be answering the question “can you have multiple brokerage accounts” and also discuss the pros and cons of having multiple brokerage accounts
Can You Have Multiple Brokerage Accounts?
The Securities Exchange Board of India (SEBI) does not hold any restrictions on Individuals opening more than one Demat account with different brokers with a valid PAN card.
But it is important that all the Demat accounts are linked to your PAN card so that complete information can be recorded in the central database of SEBI. This is will enable SEBI to keep track of all your financial holdings only with the help of PAN.
Now that we know it is possible to open multiple brokerage accounts, let us look at the advantages and disadvantages of owning multiple brokerage accounts.
Advantages Of Multiple Brokerage Accounts
Here are the advantages of having multiple brokerage accounts:
1. Access To Different Research Reports
Different brokers create different research reports based on their analysis. By creating accounts with different brokers, you can get access to their research reports which can help you select stocks more efficiently.
2. Maintain An Organized Portfolio
Individuals who are involved in the market generally tend to trade and invest for the long term. Having more than one brokerage account can help you segregate your trades and long-term investments.
Also, you can reap the benefits of investment advice from full-service brokers for long investments and the benefits of decreased fees from discount brokers for short-term trades.
3. To Reduce Commissions And Margin Costs
Different brokers will have different cost advantages. That is, while one broker may offer commission-free trading, the other broker may offer lower margin costs.
Individuals can open Demat accounts with different brokers to benefit from the cost advantage of different investing/trading options.
So, depending on the type of trade one is looking to take, one can choose from one of the various brokerage accounts.
Disadvantages Of Multiple Brokerage Accounts
The following are the disadvantages of opening multiple brokerage accounts:
1. Additional Charges
Having a brokerage account comes with various charges like Annual maintenance charges (AMC) in order for your account to remain functional. These charges will increase with the increase in the number of Demat accounts held.
2. Freezing Of Account
When the Demat account remains inactive for a long period of time, the brokers will freeze the Demat account until the re-completion of KYC formalities.
Trading/investing through different Demat accounts will result in an increase in the time required to monitor your portfolio and keep track of investment activities.
In this article, we discussed the topic “Can you have Multiple Brokerage Accounts?” and also discussed the advantages and disadvantages of opening different brokerage accounts.
Though having multiple Demat accounts comes with additional charges, it can prove beneficial to individuals. But before opening multiple accounts, it is important for individuals to evaluate how they invest in the markets and evaluate whether it will be beneficial for them to hold multiple Demat accounts.
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