A Demat account is an electronic account to store and transfer financial holdings securely. Bonds, Exchange-Traded Funds (ETF), Mutual Funds, Sovereign Gold Bonds (SGB), etc., derivatives, tend to be among the financial holdings.

The trading account functions as an interface between the share market and your Demat account. Both are intertwined to facilitate a smoother operation and stop any erroneous operation or mishap.

Could I Create Multiple Demat Accounts?

To trade in the stock market, one may open more than one Demat account, as mentioned previously. The difficulty arises if you have to separate your investments and monitor your financial portfolios. Holding multiple Demat accounts is advantageous but has lots of drawbacks that are not handy for somebody who's just starting their investing journey.

Linking Multiple Demat Accounts with a Trading Account

Follow these steps to link several Demat accounts to one particular trading account:

1. Check whether your broker permits the trading account to be associated with other brokerage Demat accounts.

2. Consult with your brokerage firm on the number of Demat accounts that can be connected to a single trading account. 

3. Check if there is any additional cost associated in doing so

4. To merge many Demat accounts together by tying them with one trading account, follow the directions given by a brokerage company.

While linking multiple Demat accounts to a single trading account is possible, sticking to a single broker for both trading and Demat accounts is the preferred method. It simplifies operations, minimizes errors, and provides superior service, making it an ideal choice for most investors.

Having multiple Demat accounts under one PAN card is completely legal, but before you opt for this approach, it’s essential to understand the implications and manage them effectively. Here are some key considerations:

1. Each Demat account incurs an annual maintenance charge (AMC), which is mandatory. These costs can add up and impact your investment returns if accounts are not actively utilized.

2. Multiple Demat accounts are beneficial for active investors or professionals who can manage them efficiently. Beginners or part-time traders may find it challenging to handle multiple accounts effectively.

3. You must consistently check the transaction history and monetary balance of all your Demat accounts. Neglecting an account can result in dormant status and additional penalties.

4. Brokerage fees differ across accounts, which can affect your overall profit margins. Be aware of these differences to choose the most cost-effective option for each transaction.

Conclusion

Most professional traders keep all their assets in Multiple Demat accounts. They frequently hold their equity in one Demat account and mutual funds in some other Demat accounts to better handle their investment in the stock market.