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Exploring the Advantages and Disadvantages of Multiple Demat Accounts

Aisha , Last updated: 15 May 2024  

To some people, investing is a daunting prospect, but it is not a challenge if you are armed with information. If you wish to invest, especially in different securities like stocks, bonds, and more, you must first open a Demat account. This is necessary as it is a holding account that stores your securities in a digital format. This is linked to a trading account for seamless trading transactions.

Once you know that you have to open a Demat account, you may wonder if you can open more than one. You can certainly open more than a single Demat account and may want to do so to efficiently segregate your investments and manage them systematically.

Exploring the Advantages and Disadvantages of Multiple Demat Accounts

Opening More than a Single Account

You can open more than a single Demat account, but you can only open one with any particular broker. If you wish to open a second Demat account, you must do so with another broker. So, you may open a Demat account with a specific broker and then decide to open another one with another broker. However, if you are considering this, you must know the advantages and disadvantages of opening more than a single Demat account or opening multiple Demat accounts.

The Advantages of Multiple Demat Accounts

Nowadays, since the Demat account opening process is easy and convenient, several people can open Demat accounts online from the comfort of their homes. This may prompt people to have more than one Demat account as they can monitor and track different types of securities systematically. Multiple Demat accounts may afford a diverse portfolio. Here are some of the advantages of having multiple Demat accounts:

  • Systematic Investment

With various assets and asset classes to trade in, multiple Demat accounts allow you to monitor your securities in a systematic way, while boosting portfolio diversification. With multiple Demat accounts, securities can be categorised so you don't get confused while maintaining your portfolio and making plans for investment.

  • A Range of Brokers

If you open a Demat account with a broker, you may want to open another one with a different broker who offers you a set of different benefits. Each broker brings varying advantages in terms of services offered, While some brokers offer you learning material and news insights, still others may give you suggestions and real-time data. With multiple Demat accounts, you have the advantage of more benefits and an array of different brokerage features.


The Disadvantages of Multiple Demat Accounts

While the Demat account opening process may convince you to open more than one Demat account, there are some cons when you do this. Here are some disadvantages of opening multiple Demat accounts:

  • Difficulty in Account Maintenance

Having multiple Demat accounts may confuse you and you may not be able to track and monitor them with efficiency. Furthermore, you may forget that some of them exist and fail to notice that they charge you fees.

  • More Fees

It is important to note that when you open a Demat account, you may not be charged for the opening process, but you will be charged for different transactions of trading as well as have to pay annual maintenance fees for each account you possess (even in the event you do not use accounts). This means you end up paying more than if you had one account.

  • More Consumption of Time and Effort

While keeping a track of multiple Demat accounts, you tend to exert more time and effort than you would with just a single Demat account. It is important for you to maintain passwords and keep data connected with your Demat accounts safe and secure. In doing this, you may spend a lot of time and effort which may not be possible in the long run.


Assess Pros and Cons of Multiple Demat Accounts

Although having multiple Demat accounts can prove useful, especially if you are a long-term investor with a plethora of different investment instruments, it may be a cumbersome effort too. Furthermore, you should be aware of the pros versus cons in having multiple Demat accounts associated with charges for transactions and maintenance and weigh certain factors before you make decisions.

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