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A 2-in-1 or 3-in-1 account? Which one for you?

August 20, 2008

Online trading can be either in the form of 2-in-1 or 3-in-1 account. A 3-in-1 account would ideally include a bank's saving account, a demat account and, a trading account. A 2-in-1 account misses out on the bank savings account.

If you are opening a trading account with your banking partner like ICICI Bank, HDFC Bank or SBI then you can even link your existing savings account to the online trading account and if you already have a demat account with the bank then you can link both the savings and the demat account to the online trading account.

In that case, you just need to open a trading account with your selected brokerage. A non-banking brokerage house like Sharekhan or IndiaBulls will offer you a 2-in-1 account.

With a non-banking brokerage, you will have to open a new demat account as well because you cannot link your existing demat account which you might be holding with your bank unless you have an old demat account with the brokerage.

Also if you are planning to open an online trading account with a non-banking brokerage, it is advisable not to link the trading account to your saving account held in any of the co-operative banks as there are loads of hassles especially while buying and selling of shares.

Once this is done, you will have to grapple with account opening formalities. This primarily involves signing of an account opening form, an agreement with your brokerage, a copy of your address proof, a photo-identify proof, and a copy of your PAN card.

Note: You will not be able to trade if you do not provide a copy of your PAN card. So if you do not have a PAN card, hurry! The same is applicable to NRIs.

Are you already itching to go ahead and start trading? Wait! before you do that you must know what are the opportunities available to you.

Photograph: INDRANIL MUKHERJEE/AFP/Getty Images

Also read: Quiz: What's your inflation quotient?
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