Should you have more than one brokerage account? Key points to consider | Mint

Indian investors no longer need multiple brokerage accounts, as modern trading platforms now offer a wide range of services in one place. These platforms are ever evolving and extremely efficient. Still, is sticking to a single account a smart choice, or does it make financial planning more complicated? Let’s explore the pros and cons.

Segregating investments and diversifying services

It gives the convenience of maintaining segregated portfolios by strategy or asset class. There is, for example, an account to keep for equities investment long term and another for intraday or derivative trading. Segregation simplifies the portfolio management as well as the tracking of performance.

Further, most of the different brokers offer something unique to users with distinctive advantages such as: cheaper fees, sophisticated tools, or professional research reports. With investment diversification across multiple accounts, investors can make use of these tools to personalise their trading experience. Such diversification, as experts attest, can be a hedge against technical failure or service loss with a single broker.

flexibility and access to more markets

Having multiple brokerage accounts is more flexible and provides broader access to more diversified investment products. Some brokers provide international stocks, commodities, or alternative assets, which are not included in one single platform.

Investors who need to invest in global markets or particular investment products can have better benefits using different brokerage firms. Additionally, there may be a positive competition among the brokers that leads to improved customer service, seamless and smooth trading platforms, and reduced cost of transactions, making the overall trading experience better.

What are the drawbacks of having multiple accounts?

As useful as the perks are, more than one account also carries some complications with them. There are each account’s upkeep fees and compliance fees like KYC renewals, paying money at two different accounts and tax reporting. These types of fees, in the long term, can prove to be very expensive.

Also, it gets difficult to maintain track of firm action such as dividend or stock split in more than one account. Further, there is higher risk of overtrading due to greater exposure to various platforms, which results in unwanted losses.

When does it make sense?

For experienced investors with more than one strategy or family accounts, having more than a single account will be beneficial. But for those who are just starting or for individuals who have very simple investment objectives, a single account would work for them.

It eventually comes down to the choice of investors and how much exposure they aspire to have in equities. Even for starters if they can control themselves and have an understanding of futures and options along with concepts such as compounding and long-term investments, then they can look to consider two accounts and manage them professionally.

To conclude, more than one brokerage account is hence worth it but demands planning and self-control. Consider your investment objective, risk tolerance, and capacity to manage greater responsibilities before reaching a final decision. An equal balance can give you maximum returns with the minimum drawbacks.

Lastly, if you are confused about your future financial goals and if you should at all consider two brokerage accounts or not, then it is always prudent to reach out to a SEBI registered investment advisor for seeking guidance that can help you make informed investment decisions.

Disclaimer: Investing in the stock market involves risks, including potential loss of capital; always research thoroughly and invest wisely.