A beginner investor has a plethora of questions when it comes to stock market investing. One of the common topics that you will regularly encounter is whether it is okay to open multiple Demat accounts..? Some investors are inquisitive to know if they can open Demat accounts with various investment platforms; whereas others are concerned about the perceivable benefits or disadvantages of doing so.
In this article, we look at the pros and cons investors face, when opening multiple Demat accounts.
What is a Demat Account?
A Dematerialized or Demat account is an account that an investor opens with an stock broking platform. This account enables investors to hold shares and securities electronically. With a Demat account, one can invest in Stocks, ETFs, Bonds etc. and manage them through a single platform.
Can you Open Multiple Demat Accounts?
Yes. An investor can link multiple Demat accounts across investment platforms with their PAN number. The process is similar to having multiple bank accounts with different banks. However, as per the SEBI, the PAN number must be linked to all the Dematerialized accounts you open, as the PAN acts as a unique identifier.
5 Pros of Opening Multiple Demat Accounts
1. Improved portfolio segregation
A diversified portfolio often consists of different instrument types. Because of this, the account holder can usually find it challenging to manage them well if they only open a Demat account. Having multiple accounts enables improved segregation, be it regarding types, classes, the motive of holding, or tenure.
2. Using knowledge from one broker to manage other investment accounts
Another advantage of opening multiple Demat accounts is that it allows you to use the information and knowledge garnered from a broker to manage a portfolio at a discount broker on your own. It would allow you to fiddle with a plethora of options when it comes to optimising your portfolio returns.
3. More options
Often, the services offered by investment platforms differ. In such cases, having different accounts would enable you to make the most of these offers and use them to build a robust portfolio.
4. Easy intraday tracking
With multiple accounts, you allocate one or more for intraday trading and others for investing. It would allow you to keep track of your profits and segregate them between intraday and investment.
5. Different accounts serve different purposes
Users often like to keep the investment account separate from their trading account. Having multiple accounts enables these users to use them to serve different purposes. For example, the user can keep one or more for long-term investing or Mutual Fund, ETF, IPO, whereas the rest can be used for trading F&O, Currency, Commodity etc.
3 Cons of Opening Multiple Demat Accounts
- Having multiple accounts entail higher maintenance fees.
- If you are keeping any of the accounts idle for a longer span, they can be frozen or turn dormant.
- Managing multiple accounts can be time consuming and tedious.
To Sum Up
Having multiple Demat accounts is not useful for everyone. It can only be viable if you find it challenging to manage all your investments at a single place or if you like to keep real-time track of all your investment types with optimised ease.
You can also read – 5 Factors to Keep in Mind Before Opening a Demat Account
Happy Investing 😇
Disclaimer: This blog is not to be construed as investment advice. Trading and investing in the securities market carries risk. Please do your own due diligence or consult a trained financial professional before investing.