Demat account acts as a safe haven for all your securities. This is an account in which you can save your securities such as shares, bonds etc in the digitized format. The process of digitizing these securities is called dematerialization and hence the account is called a demat account. Anybody who wants to trade in the stock market needs to open a demat account. Just like a savings bank account which holds your liquid money, a demat account hold your securities. When you trade in the stock market and buy or sell shares, they are debited or credited from the demat account. How to open a demat account is a question any trader will have. You can open a demat account with Depository Participant registered with SEBI. All you need are your PAN, Aadhar Card and resident details.
Anybody can open a demat account. In India, online demat account opening is something which has made the process to open a demat account a simpler one. Also, there is no limit on how many demat accounts can a single person own. All you need to open a demat account is your PAN and Aadhar card.
One important thing which you should note is that there are many brokers which have the compulsion of opening a demat account when opening a trading account. This is mandatory. While you can also open multiple demat accounts with multiple brokers who are either discount or full-service brokers.
Here we share a few pros and cons of having multiple demat accounts.
Pros of Multiple Demat Account
You can open multiple demat accounts based on your investments. This can help you manage your investments separately. One demat account can be used for long term investments and one demat account can be used for short term investment. Another demat account can be used for frequent trading for hich you need the shares.
Having multiple demat account brings discipline to your investment process. Though, you should note that you cannot open mutiple demat account with one broker itself. It can be with different brokers.
Multiple demat account also increase your chance of getting the first preference for an IPO allotment.
Cons of Multiple Demat Account
Multiple demat account means you have to pay Annual Maintainance charges for all of them. These charges may vary as each broker has different AMC charges. If you are someone who has many investments at different places, then keeping a track of multiple demat accounts becomes a task.
Also there might be cases where you forget to operate one of the accounts and after a point it the broker freezes it. This might happen if you have forgotten the login id and the password.
All in all it is an individual choice whether you need multiple demat account or not. Demat account opening is easy and hence it is simple to have many of them. But the answer to the question if you can open multiple demat accounts, then yes you can have as many as you want.