A demat account is a mandatory requirement for those who want to trade in securities. This account is like your bank account, as it holds the securities for you. You need to have a bank account, a trading account, and a demat account to trade in the stock market. It is possible to have multiple demat accounts in India.
Many traders want to have the best of both worlds and therefore, they prefer multiple demat accounts. Some traders have trading accounts with a full-service stockbroker, as well as, a discount broker. This allows you to make the most of the services offered by both the types of brokers.
However, you also need to consider brokerage, customer service, and a range of trading products before making a decision. A single broker might not be the best at all services and hence, multiple demat accounts can make a huge difference.
Additionally, you can also have multiple demat accounts to segregate between trading and investment practices. This will keep you aligned with your goals and you will be able to plan your investments in a better manner. It is important to remember that you cannot have two demat accounts with the same stockbroker. When you open demat account online, understand the terms and conditions of the broker. It does not make sense to have multiple accounts with the same broker.
The process of demat account opening is quick and convenient. However, in multiple accounts, you need to remember that there will be annual maintenance charges in each account. This could increase the cost of trading. Moreover, if the account remains inactive for a very long time, it will freeze after a few alerts sent to you and you will have to go through the e-KYC process again to reactivate it. You will also need more time to track and manage all the accounts separately.
There are pros and cons of having multiple demat accounts but serious traders enjoy having different accounts for different investment goals. You do not need to close a demat account when you open a new one and you can link any number of trading accounts with your bank account.
Most importantly, you do not need multiple trading accounts for online demat account opening. You can legally manage one bank account and multiple trading accounts and one trading account and multiple demat accounts.
Consider your personal preference and requirements before opening multiple demat accounts in India.