Manage your investments better with secondary demat account

Every day we’re hit with market news, hot tips, and predictions that make us feel like we need to act immediately. Fear, greed, or just the thrill of a quick profit often push us into decisions that don’t really help in the long run.

The truth is that impulsive investing is one of the main reasons many individuals fail to build lasting wealth. Every time we chase a trend, try to time the market, or sell too soon for a small gain, we’re cutting short the real driver of wealth creation: compounding.

Compounding only works when we give it time. If we’re constantly reacting to every rise and fall in the market, we don’t let our investments grow steadily, year after year.

So how can we break free from this pattern? The answer lies in systems that help us stay disciplined and protect our long-term plans. That’s why we’ve introduced the Secondary Demat Account at Zerodha.

How it helps investors

Better investor behavior

Market volatility makes it hard to sit still when all your stocks are flashing red. The secondary account helps by keeping your long-term holdings completely separate from your trading positions. They don’t even show up on your trading screen. It helps to keep your long-term holdings out of sight and out of mind.

And even if you do get the urge to sell, you can’t do it instantly. To sell from the secondary account, you first need to transfer shares back to your main account, which takes a day. That one-day pause works as a cooling-off period, giving you time to think instead of reacting in panic.

Separation of long-term investments and short-term trades

For investors who both trade and invest, mixing everything in one account creates problems. India’s tax system uses the FIFO (First In, First Out) method to calculate capital gains, which assumes you’re selling your oldest shares first, even if you didn’t intend to.

For example, imagine you bought a stock at ₹2,000 in January to hold long-term and again at ₹2,500 in March just for a short trade. If you sell the March shares, the system still treats it as if you sold the January ones first. This not only disrupts your long-term plan but can also lead to unexpected tax consequences.

With two demat accounts, FIFO applies separately to each account. Your long-term investments in the secondary account remain untouched, allowing you to trade freely in your main account without worrying about accidentally selling those long-term holdings.

By using a secondary demat account, you can improve portfolio organization, make better investment decisions, and plan for taxes more efficiently. And you can open one for free in a few simple steps on Console.

How to open a secondary demat account

1. Log in to Kite.
2. Click on your user ID
3. Click on Console.
4. Go to Account
5. Click on Demat → Secondary and click Continue.
6. If your primary demat has a nominee, enter the nominee’s PAN.
7. Confirm the undertaking and click Continue.
8. Complete the In-Person Verification (IPV).
9. Click Sign Now, enter your Aadhaar, tick the undertaking, and click Get OTP.
10. Enter the OTP and click Verify OTP.

Your secondary demat account will be opened in 48–72 working hours. You’ll get an email confirmation from Zerodha, and it will appear under the Demat section in Console.

How to transfer shares to the secondary demat account

1. Go to console.zerodha.com/portfolio/holdings/transfer.
2. Select the securities and quantity
3. Click Continue and then Confirm.
4. Authorize debit of stocks with your CDSL TPIN and OTP.

First-time setup: add secondary demat as beneficiary

• Between 3 and 5 PM on trading days, CDSL will email you a link.
• Enter your PAN and 16-digit demat ID
• Click Submit.
• Tick beneficiary details → Generate OTP → Accept → OK. (Once added, you won’t need to repeat this step.)

Confirm the transfer

• At 5 PM the same day, CDSL will send an email/SMS.
• Verify by 8 PM using PAN or demat ID with OTP.
• If you miss the 8 PM deadline, the transfer must be restarted.

Securities will reflect in your secondary demat account the next day. Transfer charges of ₹25 + 18% GST per security per transaction will be applicable for the transfer of shares.

Once transferred, shares won’t appear in Kite holdings but can be tracked on Console. To sell them, you will need to first transfer them back to your primary demat account using the same process explained above.

If you have any queries, let us know in the comments.