Gone are the days when demat account was considered to be a privilege and only the elite class of society had access to them. In the modern time, demat account is more of a necessity and less of a privilege.
Demat account can be considered to be the getaway to the world of investments in India. Whether you want to invest in stocks, bonds or derivatives, you need a demat account as the first and foremost step. A demat account holds all your holdings in to one place in a dematerialized form or electronic form. To match up the modern fast paced life, some banks have come up with a new concept known as 3-in-1 account. If you get a 3-in-1 account, you will have your demat, trading and savings account linked to one another, to help you with seamless investments.
Many brokers have collaborated with various banks and are offering 3-in-1 account to ease out the process of investment for investors. Since all your accounts are linked you can ensure seamless transactions from your savings account to your trading account and vice versa depending upon the transactions in your demat account.
Today, we will take a look at some of the advantages and disadvantages of having a bank linked demat account and find out whether you should get a 3-in-1 account or not.
Table of Content
Bank Linked Demat Account: Advantages and Disadvantages
What is a 3-in-1 Account?
When you plan to invest, you need 3 different accounts – demat, trading account and savings account. Now getting these 3 accounts from their respective service providers can be quite a hassle. Therefore, many companies have come up with a solution known as 3-in-1 account. With a 3-in-1 account you have all your accounts under one umbrella. All these 3 accounts are linked, which allow for seamless transactions between your savings account and trading account. Demat services are provided by the subsidiaries of the bank.
This allows you to open and manage all the 3 accounts in a single go and get rid of the repetitive paperwork and hassles. Apart from banks, many stockbrokers have collaborated with financial institutions and provide 3-in-1 account services.
Advantages of a Bank Linked Demat Account
Having a bank linked demat account or a 3-in-1 account comes with numerous advantages. The first and foremost advantages is the seamless integration of your savings account, trading account and demat account. It will allow for an easy fund transfer from your savings account to trading account and vice versa depending on the requirement. Having all the 3 entities under a single umbrella will allow you to easily manage and monitor them using a single app or website. You need not to toggle between multiple apps or windows for simply tallying your statements. You can analyze your demat account for all the sale and purchase transactions and get the total profit and less after deducting all the charges from your savings account.
Disadvantages of a Bank Linked Demat Account
Apart from the advantages, there are certain disadvantages of having a 3-in-1 account too. The major disadvantage of having a 3-in-1 account are high brokerages. These accounts usually have a high brokerage structure compared to normal demat accounts. The savings account associated with such accounts have a requirement for maintain a certain amount as minimum balance. Not maintaining the same can incur charges. Also, the trading platforms may not be as advance as those provided by the competition.
Conclusion
So, it is pretty clear that unlike every other account, there are both pros and cons associated with 3-in-1 accounts or bank linked demat accounts. It totally depends on your requirement whether you want to opt for a 3-in-1 demat account or a conventional demat account, which may or may not be linked to your savings bank account.
Happy Investing!
