uTrade Algos
As we know, an individual can open multiple Demat accounts. But remember, you can only open one Demat account with a brokerage firm. The same goes for a trading account. However, you can map multiple Demat accounts to a trading account.
As an investor, you need to know that most brokers don’t permit mapping a Demat account to another brokerage trading account, which is an operational challenge for them.
A Demat account is an important part of every trader who wants to invest in the Indian stock market. Similarly, it is compulsory to have a trading account to trade in the share market. The need for multiple Demat accounts varies from investor to investor. As the account opening process is simple, any trader can open any number of Demat accounts according to their trading purpose.
Table of Contents
Demat account vs. Trading account
A Demat account is a digital account for storing and securely transferring all your financial holdings. These financial holdings include bonds, Exchange Traded Funds (ETFs), mutual funds, Sovereign Gold Bonds (SGB), derivatives, etc.
A trading account is an interface between the share market and your Demat account. Both trading and Demat accounts are linked to each other to perform harmoniously and avoid any error or wrong transaction.
Is It Possible to Open Multiple Demat Accounts?
As we have already discussed, it is possible to open more than one Demat account to trade in the stock market. However, the problem arises when you need to segregate your investment and track your financial portfolios. Holding multiple Demat accounts is beneficial, but it also has lots of drawbacks that are not convenient for someone who is just starting their investing journey.
Linking Multiple Demat Accounts with a Trading Account
To map multiple Demat accounts to a single trading account, you need to follow these steps:
- Check whether your broker allows the trading account to link to other brokerages’ Demat accounts.
- Contact your brokerage firm and confirm the number of Demat accounts you can have with your trading account.
- Check the additional fees for providing this service.
- Follow the instructions provided by the brokerage firm to link multiple Demat accounts with a single trading account.
As a popular method, it is best to stick with a trading account and a Demat account from a single broker rather than opening multiple accounts to avoid operational problems. It is easy to trade with both Demat and trading accounts from the same platform, which provides better service.
One such platform is Share India. It offers full-service broking services along with trading advisory for its customers. You can trade with the Share India trading app and a web-based app.
More About Multiple Demat Accounts
It is totally legal to have multiple Demat accounts under one PAN card. However, you must know about the need for this many Demat accounts and remember a few things which can harm your investments:
- Each Demat account you hold will attract different maintenance charges, as these are mandatory charges for your Demat account.
- An active user or professional can properly utilise multiple Demat, whereas a beginner or part-time trader cannot manage or use multiple Demat accounts.
- You need to check the transaction and the monetary balance of the Demat accounts regularly.
- Brokerage charges and profit margins can vary on each Demat account. Learn about Annual Maintenance Charges (AMC) charges and their types in detail at Share India.
Conclusion
Most professional traders often use multiple Demat accounts to keep all their assets in different Demat accounts. For example, they often keep their equity in one Demat account and mutual funds in other Demat accounts. By doing this, they have better control over their investment in the stock market.
A trading account plays a crucial role in transferring your shares from one Demat account to another. It is important to link your trading and Demat account. Opening a Demat and trading account is as simple as opening an online bank account.