Stock market investment: Can you have multiple Demat accounts? Know the pros and cons

Retail investors have increased significantly because they are getting stock market trading opportunities thanks to mashrooming investment apps and easy internet access. For investment in stock markets, you just need to have a demat account. After you have created an account with a broker (a registered depository participant), you can buy stocks and other securities online.

Can an individual have multiple demat accounts?

Individuals can create a demat account with more than one broker, which means they can have more than one demat account. However, only one demat account is authorised per depository participant. A general discount broker or a full-service broker can offer you all the information and resources required for trading and investing in assets such as stocks, mutual funds, ETFs, and bonds. You can choose either based on experience or the type of returns you want over a particular period.

While one person is allowed to have one PAN card, they can open two or more demat accounts using the same PAN card. All securities you buy and sell will be connected to your PAN card.

There are many pros and cons of having multiple demat accounts. In this article, we will look at some of the advantages and disadvantages of creating many demat accounts.

Advantages

Portfolio segregation:

Having multiple demat accounts allows for effective portfolio segregation. You can have distinct trading and investment portfolios, such as long-term investments and short-term/frequent trading in multiple demat accounts. Given that some people invest in a variety of investment goods, having multiple accounts helps to keep these categories sorted and investors from being confused. 

Expand your portfolio: 
It also helps you expand your portfolio, which provides you with more investment opportunities. E.g., if you want to participate in an IPO whose allocation is not available to the general public, your more varied portfolio with many demat accounts is more likely to provide you with an investment opportunity. 

Easy tracking:
As mentioned above, with multiple demat accounts, segregation is easy, so you can track your transactions easily.

Research reports: 
With multiple demat accounts, you can avail the benefit of various research reports provided by different brokers.

Disadvantages

Time consuming:

Although it is easy to track transactions for various kinds of investments through multiple demat accounts, it is also time-consuming as you have to switch to different apps to track your investments.

High maintenance charges:
As every broker charges a fee for a demat account, you will end up spending more on paying AMCs (annual maintenance charges).

Account freezing:
Your account can also be frozen by a broker if you don't use a demat account for a long time.

Conclusion

As everything has its pros and cons, so do multiple demat accounts. But if you are an experienced investor, it can be beneficial for you to have more than one demat account.