Zerodha CEO Nithin Kamath Shares Investing Hack To Avoid Impulse Selling, Save Tax

Nithin Kamath, co-founder and CEO of discount broking platform Zerodha, has shared an interesting personal investing strategy that has now shaped a new product offering for retail investors.

Taking to social media, Kamath recalled how, during his active trading days before starting Zerodha, he maintained two separate demat accounts — one offline for long-term investments and another online for active trades. The idea, he explained, was to create a barrier that prevented him from frequently selling his long-term holdings.

“Whenever I had to sell, it wasn’t easy. I had to physically fill out delivery instruction slips and send them to the broker. That extra effort kept me from acting on impulse,” Kamath wrote.

He highlighted that the dual-account method also provided a tax advantage. Under current regulations, when both short-term and long-term holdings are kept in a single demat account, taxation is applied on a First-In, First-Out (FIFO) basis. By keeping investments segregated, Kamath was able to manage tax liabilities more efficiently.

Zerodha, he said, had been working on enabling a similar option for its customers. “We wanted to offer a secondary demat for a long time, but there were challenges. We finally figured out how to do it,” Kamath announced. Investors can now open an additional demat account through Zerodha, allowing them to separate long-term holdings from short-term trades.

Kamath described this as both a “behavioural hack” to curb impulsive selling and a smart tool for tax management. Notably, he added that his best returns historically came from stocks held the longest in his secondary demat account.

The move reflects a growing trend in India’s investment ecosystem, where platforms are attempting to blend investor psychology with regulatory advantages, making wealth-building more disciplined and less prone to short-term trading temptations.

Disclaimer: The information provided in this article is for informational purposes only and should not be considered as investment advice or a recommendation to buy, sell, or hold any security or financial product. Stock market investments are subject to market risks. Readers are advised to consult with a qualified financial adviser before making any investment decisions.