Important Things To Know To Open Multiple Demat Accounts
When considering the opening of multiple Demat accounts, keep the following points in mind:
- Purpose of Multiple Accounts: Decide why you need multiple Demat accounts. You might want one for long-term investments and another for active trading. Segregating accounts based on purpose can help in better portfolio management.
- Fees and Charges: Each Demat account comes with its own set of charges, including annual maintenance fees, transaction charges, and other associated costs. Evaluate these costs before opening additional accounts.
- Brokerage Plans: Different DPs offer various brokerage plans. By having multiple accounts, you can take advantage of different plans that suit your trading or investment style.
- Ease of Management: Managing multiple Demat accounts can become complex. Ensure you have a system in place to track all transactions, dividends, and corporate actions across different accounts.
Can I have 2 Demat Accounts?
Yes, a person can have two Demat accounts in India, but it’s important to follow specific guidelines:
- Depository Participants: You must open each Demat account with a different DP. This helps in keeping the accounts distinct and avoids any conflict of interest.
- Compliance with Regulations: Ensure that each account complies with SEBI regulations, including proper KYC documentation.
- Purpose and Strategy: Clearly define the purpose of having two Demat accounts. For instance, one could be for equity investments and another for holding mutual funds or bonds.
- Tracking and Management: With two Demat accounts, it’s essential to maintain clear records and track all activities meticulously to avoid any confusion or errors in transactions.
Most individuals ask brokers 'can I open two Demat accounts?' The straightforward answer is yes. Investors can consider opening two Demat accounts with a discount broker and a full-service broker simultaneously.
Advantages and Disadvantages of Holding Two Demat Accounts
While finding the answer to - can we have multiple Demat accounts - and making a decision, investors should go through the positives and negatives of multiple Demat accounts.
Advantages of Holding Two Demat Accounts
Categorisation of Portfolio:
By creating multiple Demat accounts, you can easily segregate your investment and trading portfolios.No Minimum Balance:
There is no need to store securities to meet a minimum balance requirement on your Demat accounts.Link to Single Trading Account:
You do not need two trading accounts. A single trading account can be linked to multiple Demat accounts. However, this can vary from broker to broker.Distribution of Investments:
Two different demat accounts can help you manage different kinds of investments. If you invest in bonds, equities, debentures etc. You can segregate these investments on different demat accounts to track better, depending on the size of your investment.
Disadvantages of Holding Two Demat Accounts
Account Deactivation:
If you do not use a Demat account for a certain period, it will be deactivated by the broker.Extra Expenses:
When you open two Demat accounts, you need to pay AMC for both accounts even if any of these accounts is not in use.
Rules To Know If You Have Multiple Demat Accounts
If you have multiple Demat accounts, consider these essential rules:
- Maintain Distinct Accounts: Ensure each account is with a different DP to comply with SEBI regulations.
- Keep KYC Updated: Regularly update your KYC details in all your Demat accounts to avoid any issues with transactions or regulatory compliance.
- Monitor Costs: Be aware of the cumulative costs, including maintenance fees, transaction charges, and other fees associated with each account.
- Track Corporate Actions: Monitor dividends, bonus issues, and other corporate actions for each account to ensure you don’t miss out on any benefits.
- Tax Implications: Keep track of the transactions in each account for accurate tax reporting, as holding multiple accounts can complicate your financial records.
Conclusion
Thus, you can open multiple Demat accounts with a single PAN card but with different stockbrokers and the answer to ‘how many Demat account one can open’ depends on your investing and trading requirements in the stock market.