A Bank account to allocate and receive money.
A Trading Account to buy and sell shares and
A Demat Account where these shares are held.
The process seems pretty straight forward but in practice, factors like keeping track of the accounts separately as well as remembering multiple login details can make it bothersome.
To bypass this complexity and make stock trading simple and easy for investors, Banks have introduced 3-in-1 accounts. A 3-in-1 account gives you the functionality of a savings, trading and Demat account, all integrated into one. The catch however, is that these accounts are only available with financial institutions or Depository Participants that have a banking arm. So typically, you can open a 3-in-1 account only with a Bank.
So why go for a 3-in-1 Account?
Since the inception of 3-in-1 accounts in the beginning of 2006, Banks have been constantly working to improve on and add to the features associated with such an account. A good example for these improvements is the Axis 3-in-1 Demat Account through which you get access to a savings account, a demat account and a trading account with a variety of tools and market watch-lists from Axis Direct that can help facilitate well-informed trading decisions. Let us take a look at the features that gives the 3-in-1 Demat account an edge over a traditional Trading account: –
- Considerable reduction in the paperwork as compared to the documents required when opening separate Demat, savings and trading accounts.
- Transfer of funds is quick and secure. In case you are transferring funds from a Savings account in one Bank to a Trading account with some other Bank or Depository Participant, then you would need to login into two different accounts to authenticate a fund transfer. This not only increases the transacting times, but also reduces the efficiency.
- Funds can be transferred only to the trading account linked with the savings account which makes fund transfers secure and within your knowledge.
- As per SEBI regulations, any funds that are left in a trading account will be returned back. For purchasing new shares at a later date, fresh funds need to be allocated. This can be a cause of discomfort when your trading accounts and bank accounts are different.
However, any idle funds present in the trading account of a 3-in-1 account can be kept stored there itself or moved back to a savings account if needed. The above SEBI regulation is not enforced on a 3-in-1 account.
- You can easily keep yourself updated about your current account portfolio and operate the account using the internet or also trade on the phone.
- Banks that offer 3-in-1 accounts also provide a very diversified range for investing in different assets like stocks, mutual funds, bonds, debentures and company fixed deposits.
- Banks also offer consensus estimates from global research firms and a wide variety of tools like stock comparisons and real time watch-lists to determine stock before trading.