These days, owing to the multiple choices that traders have, the market is rife with many innovative approaches. The crux of the matter being profitability, any such option that suits the best interests of a trader is viewed with an open mind. In the world of electronic share trading, a demat account serves as a basic requirement.
Coming with multiple benefits like ease of operation, security and time saving factors, a demat account is the first step towards modern day share market venturing.
Tradebulls, like the credible firm that it is, offers such choices and gives a guided step by step protocol that must be followed for opening a demat account. These days, investors also seem to be fascinated with the idea of having multiple demat accounts.
Legally speaking, a person can open as many demat accounts as he likes. It is often argued that multiple demat accounts bring in the chances of better and higher dividend yields and the ability of retaining shares of multiple sectors. But is it always so?
Advantages and Disadvantages of keeping multiple Demat Accounts
Here is a comparison of various advantages and disadvantages of keeping multiple demat accounts:
1. Financial streamlining:
This is one of the core advantages of having multiple demat accounts. This offers a clear cut differentiation between various asset allocations in an investor’s core investment portfolio.
What this means is that as an investor, if you operate multiple demat accounts, you can have the benefit of streamlining your investment choices in shares on the basis of your needs and requirements.
You may wish to keep certain shares for one financial goal and the other shares for another one. If this is the case, then opening multiple demat accounts is a good and viable option for you.
2. Segregation of portfolio:
Again, let’s assume that you have kept a particular set of shares for your long-term investment gains and another set of shares for your short-term capital dividends.
In order to properly segregate the two, it is helpful to have multiple demat accounts as it can help you avoid any intermixing of your available options.
3. Ease of tracking:
It is well known fact that tracking becomes easy if the investment channels are different. Opening multiple demat accounts helps you achieve just that. You can keep a proper and convenient tracking of your shares if you have multiple demat accounts.
1. Charges involved:
Although trusted platforms like Tradebulls do not charge any hefty or additional amounts, yet there is the annual maintenance charge known as AMC that is payable to the Depository Participant.
These charges are levied for the annual upkeep of the demat accounts. If you open multiple demat accounts then needless to say that these charges also go up which may constitute unnecessary expenditure.
2. Share options:
If you are a futuristic investor with a certain dividend goal in sight, then most often you will invest in shares of a particular sector. In such cases, where there is no need for multiple sector share tracking, then opening multiple demat accounts may create unnecessary hassles for you.
This is because you will have to monitor multiple accounts and often channelize your available resources into multiple channels. This may prove to be a cumbersome and complex task for you in the future, especially if the financial goals do not match the investment options.
3. Requirement of continuous observation:
Opening multiple demat accounts can prove to be a difficult task for you, especially if you do not have the time for continuously monitoring and observing your accounts. Monitoring the demat accounts is very much important as this can help you keep a tab over unwanted or undue transactions of any sort.
However, this monitoring becomes laborious, if you are involved in other investment channels as well. Besides, it is time consuming and requires screening on your part or on part of your brokerage consultant.
- Complex structure:
Opening multiple demat accounts is not suggested if you are at the beginning stage of your venture. Besides, certain brokerage firms have additional structures for deciding the terms and conditions in case you already have a demat account with another such firm.
This increases the complexity of the entire process.
The best way forward is to utilize the services offered by a trusted firm like Tradebulls that assists you in maintaining an optimum investment channel and helps you create a balanced portfolio. In order to know more about demat account opening and to register, connect with our advisors at email@example.com or 022-40001000.