Advantages and Disadvantages of holding two Demat Accounts simultaneously
Advantages and Disadvantages of holding two Demat Accounts simultaneously

4 Advantages and Disadvantages of Holding Two Demat Accounts

There are numerous questions that new traders have when they begin their trading journey. Among the many questions, a prominent one that keeps popping up repeatedly  is whether it’s possible to have two demat accounts. If it is, what are the advantages and disadvantages of holding 2 demat accounts? Also what problems or legal hurdles should one expect, later down the road, as a result of holding two demat accounts? This article aims to answer all of those questions in more detail.

 

  • Can I Open More Than One Online Demat Account?

The short answer to that is a big yes. If you currently hold a demat account and you wish to open a second one, there is nothing stopping you. In fact, there is no limitation on the number of demat accounts you can hold at one given point. Nevertheless, before you start acquiring multiple demat accounts, it's first important to understand the implications of having more than one account.

  • Why Open more than One Demat Account?

A demat account works a lot like a savings bank account. In the same way we use more than one savings account to save and invest our money, multiple demat accounts help us to diversify our investments by storing money in different accounts. Every demat account is linked with a PAN card, hence, every equity that you invest in will be considered as your investment as it's linked to your PAN card. Another thing to note is that you can open one demat account with one broker. If you wish to open a second demat account, you would have to approach a second broker.

  • Advantages of Multiple Demat Accounts:

1. Portfolio Segregation: Having more than one demat accounts can help you segregate your portfolio efficiently. You can maintain separate trading and investment portfolios; for instance, long-term investments & short-term/frequent trading in different demat accounts.

2. Research and Analysis from Different Brokers: Having multiple demat accounts will also give you multiple perspectives on buying and selling of stocks. This can be in the form of research and access from multiple stockbrokers, or even the user interfaces used by brokerage companies.

3. Safety: Your securities are secure in the electronic form in your trading accounts.

4. Widen Your Portfolio: You can widen your portfolio by adding demat accounts along the way. This move will also go a long way in enhancing your reputation in the market. For instance, if you are looking to invest in an IPO down the road, a diversified portfolio fueled by multiple demat accounts can be the golden ticket. This is true even for government securities. 

  • Disadvantages of Multiple Demat Accounts:

1. Opening demat account multiple times will invite additional changes like annual maintenance charges and others. This will hence increase your overall trading expenses.

2. Keeping track of multiple demat accounts can be tricky as each broker offers access to trading platforms which can be confusing to figure out.

3. In the event that your demat account remains inactive for a specific period of time, your broker may freeze your account. Although your stocks can be recovered, the process may be described as a hassle.

Final Thoughts

The benefits of having more than one demat account clearly outweigh the disadvantages. If you are an experienced investor having the benefits can go even further, especially when making calculated decisions. If you are looking to open demat account online, the process is relatively simple and can be done in a few minutes. Happy trading!

Related Articles: How to Open a Demat Account Without a Broker | Factors to Keep in Mind While Opening a Demat account | Factors to Consider When Opening a Demat Account | 10 Points to Remember When Operating your Demat Account | Types Of Demat Account & Trading Account

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