Opening a Demat account is the first step in your investment journey. This is often bundled with opening a trading account as well. So what exactly are these terms and what is the difference between them?
A Demat account is an electronic repository. It holds shares and securities ( Bonds, ETFs, Mutual Fund Unit, etc) in a digital mode. A trading account, on the other hand, is the interface that enables buying and selling of stocks. As can be seen, both are essential in making the trading experience in the stock market seamless.
Having multiple Demat accounts in one's name is helpful if one is both a trader and an investor in the stock market. That way one can easily segregate their investment portfolio and trading portfolio. Technically, there is no restriction on the number of Demat accounts an individual trader can open. However, there is a catch. You cannot have multiple Demat accounts with the same Depository Participant (DP) or the same broker. That means, in case you want to open multiple Demat accounts you need to approach different DPs or brokers.
Even though opening multiple Demat accounts can be helpful, it has to be kept in mind that one has to pay annual maintenance charges (AMC) on every Demat account one has. These charges range from Rs 700 to 1000 annually and are debited even if one's Demat account is idle and no transaction is made. Added to that, Demat accounts that remain dormant for long may get freezed and have to be reactivated by completing eKYC again.
First things first. Before going on how to link multiple Demat accounts with a trading account, we need to understand, can we?
One can map multiple Demat accounts to a single trading account. However, this depends on the brokerage one are using as;
As you can see from the above discussion, you need to open an online brokerage account with a broker that allows you to link multiple Demat accounts with a single trading account, as all brokers do not provide this facility. As a consequence of this, the process of linking multiple Demat accounts with a trading account may be different for each broker.
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