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What do you Mean by Demat Account Unbundling

16 Jun 2023

If you want to start trading securities, it's important to understand that your requirements go beyond the amount of money you want to invest. A specialised securities wallet, an account with a trading entity, and a bank account for transmitting and receiving funds are all required to trade securities of any kind. There is a widespread misperception that your broker is solely responsible for supplying you with a trading and Demat account. The phrases are often used interchangeably since they are so prevalent. They are, nevertheless, two distinct yet complementary concepts.

Various Account Types that Allow you to Trade and Store Securities

  • 3 accounts in one

A 3 in 1 account is a comprehensive account plan that combines the benefits of a Demat account, a trading account, and a savings bank account into one convenient package. The trading account is used to sell and buy stocks, whereas the bank account is used to make payments and receive receipts. The securities are then kept and cleared through the Demat account in their dematerialized form. Banking institutions are the most common providers of these accounts.

  • 2 accounts in 1

A two-in-one account is one of the most popular account types nowadays. As a combination of a trading and a Demat account, this account is solely for the transaction and storage of securities. The majority of bargain brokerages provide a bundled account opening option. To transfer the amounts required, you can link any bank account you already have to your trading account.

  • Unbundled Accounts

This account type allows you to seek out separate services such as a trading account, a savings account, and a Demat account from several suppliers. Obtaining unbundled accounts would necessitate the time-consuming process of linking them together. They are, nevertheless, an excellent alternative in some situations and can also save you money.

Is it a smart idea to get an account that isn't bundled?

  • In some cases, such as when travelling, it is preferable to have an unbundled account. If you want to receive securities solely for the purpose of storing them for the future, you should open demat account first and then open a trading account when you're ready to sell your security holding. This way, you'll only have to pay for your trading account when you need it, resulting in financial savings.
  • Similarly, if you want to apply for an IPO and hold the shares for a long time, you may want to consider merely establishing a Demat account.
  • It is always a good idea for traders to keep all three accounts linked at all times. For example, if you're trading in equity and notice a great opportunity to enter a deal, you decide to go ahead and do so only to discover that your trading account is depleted. Given the volatility of the market, if you have your savings account connected to your trading account, you are less likely to miss out on such trades.
  • If you're an investor, however, having a separate set of accounts might be a good idea. This way, you can avoid paying for services you don't intend to use. You would also have the option of selecting an account at a later time that provides you with the most value for your money. This manner, you not only save money by just paying for what you use, but you also get the most out of your needs.
  • It's also worth noting that, as an investor, you can link multiple Demat accounts to a single trading account if you're the account's first holder. A single Demat account can also be linked to many trading accounts.
  • However, before settling on the accounts of one's choice, one must carefully examine all applicable charges. On the premise of giving a lucrative account opening deal, several providers impose additional hidden costs and maintenance fees. Similarly, one must consider the account's goal and purpose before deciding on the finest product and service accessible to meet their demands.

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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