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5 Things To Keep In Mind Before Opening A Second Demat Account

stock market
05 Jun 20216 mins readBy MOFSL

If you want to invest in the stock market, one of the first things you will require is a Demat account. This Demat account, coupled with your trading account opened with a broker/Depository Participant (DP), and your bank account will allow you to buy and sell shares on the stock market, netting you solid returns when done carefully and allowing you to diversify your portfolio.. Throughout your journey, you might come to learn that you can open two Demat accounts. However, while trying to answer the question ‘can i open a second Demat account ?’, there are a number of things you should keep in mind. Let’s take a look.

1. Maintenance charges.

Anyone who has two Demat accounts will reiterate this point; while the process of opening two Demat accounts might be seamless, the journey doesn’t end there. If you have two Demat accounts, you will have to pay the AMC charges as well as transaction charges on both accounts if both are active. If you don’t use one, that will continue to accumulate unnecessary AMC fees, making the answer to ‘can i open a second Demat account’ a little less appealing.

2. Chances are, you don’t need two.

While answering the question about ‘can I open a second Demat account’ it is difficult to cite obvious benefits to having two Demat accounts. This does not mean there are no benefits, and a more accurate interpretation would be that opening a second Demat account and having two Demat accounts is a strategic move made by investors who already know what they want. However, if you are contemplating “can i open a second Demat account” without a specific goal in mind, chances are you likely don’t need it.

3. Quality over quantity.

While one Demat account might not seem like a big deal, when you take into ‘account’ the various other accounts you have from bank accounts to online websites to email addresses to logins for multiple sites, two Demat accounts can be one too many. Keeping track of multiple Demat accounts might prove to be challenging, and you might be better off focusing all your attention on one rather than two Demat accounts .

4. Know what you are looking for.

As mentioned earlier, there are advantages to be gained from two Demat accounts, though it requires a fair bit of experience and prior knowledge. Different brokers and DPs offer more specific services, and you could benefit from having two Demat accounts if you can offset the higher fees and have a good use for both accounts. For example, you may use a full-service broker for one Demat, that gives you an array of services for a higher cost, and they may translate that knowledge for another Demat account with a discount broker if you’re looking to employ a slightly different investment strategy there, but don’t need additional help.

5. Your accounts could freeze.

If you are not able to dedicate enough time, then you might benefit from not looking into ‘can i open a second Demat account’, as the account will be frozen and rendered inactive if you do not use it. In addition to this, if you wish to reactivate the account, you will first have to pay the fees before you can access the account.

Conclusion.

While Demat account opening twice might seem like taking a step further in your investing journey, before looking into ‘can i open a second Demat account’, here are 5 things you should consider. Chances are, you might realise that you don’t need two Demat accounts at all.

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

Disclaimer: The stocks, companies, or financial instruments mentioned in this blog are for informational purposes only and should not be considered as investment recommendations. It is advised to consult with your financial advisor before making any investment decisions. Investment in securities markets are subject to market risks, read all the related documents carefully before investing. Investors are strongly encouraged to carefully read the risk disclosure documents prior to participating in market-related investments or trading activities. Due to the volatile nature of financial markets, no guarantees can be made regarding investment returns. Motilal Oswal Financial Services Ltd. does not offer any assured returns on market-linked securities. Please note that past performance of stocks or indices is not indicative of future results.
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