Benefits and Disadvantages of Having Multiple Demat Accounts

A demat account is a must-have if you’re planning to invest in the share market. It is a digital account that lets you store your financial securities electronically, making trading and investing easier and more convenient. You can open a demat account with your preferred broker for minimal charges and start investing in the stock market.

That said, new investors often have questions like:

• Can I have multiple demat accounts?
• Is it legal?
• Is it worth it?

The good news is that opening multiple demat accounts is perfectly legal in India and can offer several benefits. However, it also has its own set of drawbacks.

In this article, we’ll explain these pros and cons and provide practical tips for opening and managing multiple demat accounts effectively.

Things to Know While Opening Multiple Demat Accounts

Thanks to digitisation, you can now open multiple demat accounts online from the comfort of your home. But before you do, it’s important to keep a few things in mind:

• While having multiple demat accounts is legal in India, you can open only one account with a broker. Put simply, you cannot open multiple accounts with the same broker.
• You can open multiple demat and trading accounts for different purposes. For example, you can use them to segregate your investments or use one for investing and another for trading.
• Multiple demat accounts will also attract multiple annual maintenance charges (AMC) from brokers.
• If you open multiple demat accounts, it’s important to stay active on all of them. If an account remains inactive for a long time, the broker will freeze it.
• All your securities are held with the Central Depository Services Ltd (CDSL) and National Securities Depository Ltd (NSDL). This means no broker has control over them, keeping them secure.
• You don’t need multiple trading accounts for multiple demat accounts. You can simply link the same trading account with different demat accounts.

Requirements to Open Multiple Demat Accounts

There are no specific requirements for opening multiple demat accounts. As long as you meet the general eligibility criteria for opening a single demat account, you can open as many as you want with different brokers.

The basic requirements typically include:

• Valid identification proof (like Aadhar card, passport, voter ID, etc.)
• Proof of address (like utility bills)
• Proof of income (in case of activating F&O)
• PAN card
• Bank account details

Benefits of Having Multiple Demat Accounts

Here are some key benefits of opening multiple demat accounts:

1. Portfolio Diversification

Multiple demat accounts make it easier to diversify your portfolio. Opening multiple accounts allows you to segregate your investments across different brokers and spread the risk. You can use different accounts to invest in different types of securities or avail of different offerings.

2. Reduce Dependence on a Single Broker

It’s simple. By spreading your investments across different brokers, you’re not relying completely on a single platform. This way, if one broker experiences technical issues or offers poor customer service, you will not be entirely dependent on one platform.

3. Increased Investment Opportunities

With access to multiple brokers and platforms, you can enjoy exclusive investment opportunities, such as stocks, mutual funds, ETFs, or IPOs that are unique to their platform. Some brokers may also focus on specific sectors or asset classes, allowing you to tap into these offerings. By opening a demat account with Share.Market, you unlock access to WealthBasket—an exclusive investment solution thoughtfully designed by our in-house research team.

Disadvantages of Having Multiple Demat Accounts

While multiple demat accounts offer exciting benefits, they also have potential drawbacks:

1. Higher Costs

Multiple demat accounts also mean multiple associated costs, such as annual maintenance charges, transaction fees, etc. These costs can quickly add up even if you’re not using all the accounts. Therefore, it is important to compare the benefits against the costs to make an informed decision.

2. Complicated Portfolio Management

With multiple demat accounts, your investments are spread across different platforms. This can make it complicated to get a holistic view of your portfolio and track performance. Moreover, juggling different platforms and staying updated on each account’s activity can take up much of your time.

3. Account Freezing

Staying on top of multiple demat accounts can be tricky. If you don’t use an account for long, the broker may classify it as dormant or inactive and freeze it. Reactivating the account can be time-consuming and require lengthy paperwork and extensive documentation.

How to Manage Multiple Demat Accounts?

Managing multiple demat accounts can often be time consuming. Here are some practical tips to consider:

• Make sure to store your login credentials and account-related documents securely.
• Regularly review your portfolio across different platforms to ensure it’s in with your financial objectives and risk profile.
• Keep track of policy updates and changes in market regulations to avoid any last-minute hassle.
• If you no longer wish to have multiple accounts, consider merging them for seamless management.

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