It’s no mystery that share market trading can allow you to earn high returns and build substantial wealth. However, share market trading also comes with risks that must be addressed. Before you start share market trading in India, it is crucial to understand the basic terminology.
Don’t rush into investing without understanding the basic aspects of trading, like owning a Demat account. You don’t have to be a financial expert to understand basic share market terminologies. Information related to the share market is available online on websites.
Let us discuss the importance of having multiple Demat accounts in India.
Comprehending the Use of Demat Accounts in India
Are you familiar with the importance of a Demat account for online trading in India? It is the most essential aspect of digital trading in India. A dematerialisation account enables you to hold securities bought on Indian stock exchanges. However, you will depend on a trading account to purchase securities on Indian stock exchanges. Once you buy securities in India via a trading account, the Demat account will allow you to hold them. For example, assume you have bought shares on the Bombay Stock Exchange via a trading account. If you decide to hold the shares for a few days, you will require a dematerialisation account.
Some traders might do well without dematerialisation accounts in India. They are usually day traders who do not hold securities for a given time. Day traders buy and sell securities on the same day via intraday trading. To open a dematerialisation account, you must identify a reputed depository participant or stockbroker. A depository participant will help you open a dematerialisation account, whereas a broker will help you acquire both trading and Demat accounts. Usually, you will pay a small amount to acquire a Demat account in your name in India. However, you will relieve yourself from account opening charges by choosing Religare Broking.
Comprehending the Pros of Having Multiple Demat Accounts
The misconception is that an individual can only have a single dematerialisation account. As per SEBI (Securities and Exchange Board of India) norms, having multiple Demat accounts in your name is possible. A Demat account is usually linked with the trading account and accessed via a trading platform. You will have access to multiple trading platforms by having multiple dematerialisation accounts. Every stockbroker offers research facilities for investors on their trading platform. By having multiple dematerialisation accounts, you will have research insights from different stockbrokers.
With more information via multiple dematerialisation accounts, you can make better investment decisions. You will also get to use the interfaces of different stockbrokers by having multiple trading platforms. Another benefit of having multiple dematerialisation accounts is enhanced portfolio management. You can allocate one Demat account only for short-term investments and another for long-term investments. Having many Demat accounts will help you get shares in an upcoming IPO. Since you will be applying from multiple dematerialisation accounts, the chances of IPO bid approval are high.
Comprehending the Cons of Having Multiple Demat Accounts
By having multiple accounts, you might have to pay more demat account maintenance charges. Every Demat account comes with a mandatory AMC (Annual Maintenance Charge), which is pre-decided by the stockbroker. Since you have multiple dematerialisation accounts, you will be paying more annually. Also, you will invest more time managing multiple dematerialisation accounts. Another hassle with multiple dematerialisation accounts is the minimum balance requirements. Some stockbrokers might want you to keep a minimum balance in the Demat account. Stockbrokers often apply penalty charges when the minimum balance condition is not met.
In a Nutshell
Are you planning to open multiple dematerialisation accounts? You might enjoy enhanced portfolio management but will pay more maintenance charges. Also, you might spend more time managing different Demat accounts. To reduce the fees associated with Demat accounts, you can rely on Religare Broking. So open your Demat account now and start holding securities!