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Business News/ Money / Personal-finance/  Good money habits for a new financial year
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Good money habits for a new financial year

A few simple steps taken now can ensure that your investing remains smooth and effective

Shyamal Banerjee/MintPremium
Shyamal Banerjee/Mint

The beginning of a new financial year is always a good time to inculcate good investing habits. Maintaining hygiene levels in portfolio makes it easy to track investments over a period of time as well as it removes clutter. We’ve talked about some of these habits before but a revision is always a good exercise.

It’s not possible to invest in a financial asset such as a mutual fund, a bank fixed deposit, or an equity share without being complaint with know-your-customer (KYC) norms. It’s also important to keep the details updated.

First, how to check if details provided are as per the latest KYC rules? If you remember, in January 2012, the new KYC rules came about and which required getting an in-person verification (IPV) done. An IPV is proof that your KYC is genuine, and that you are alive. Your distributor or a KYC-registered agency does the IPV for you. You have to be physically present in front of the agent and she verifies your documents, in person.

Here’s how to check the status of your KYC. Visit the website of any of the five KYC registration agencies (KRA). These are:

l CDSL Ventures Ltd

(www.cvlkra.com)

l National Securities Depositories Ltd (www.kra.ndml.in)

l DotEx International Ltd (www.nsekra.com)

l Computer Age Management System (www.camskra.com)

l Karvy Data Management Services (www.karvykra.com).

You could have done your KYC through any of these KRAs but it’s possible to check the latest status on your KYC from any of these websites. Keep your Permanent Account Number (PAN) handy for this exercise.

Your KYC consists of important details such as your address, email ID, phone number, and so on. If any of these details change, like it does if you change cities, it’s important to update. “Often, people give one address for KYC but reside somewhere else. Nowadays, depositories send demat statements and also statements of mutual fund holdings that are linked through a common PAN. If your address is correct, you’ll receive the common account statement. Else, important documents get returned," said Paresh Visharia, director, Ghalla Bhansali Stock Brokers Pvt. Ltd.

Additionally, if you have done your KYC through CDSL Ventures KRA, you can view your KYC details too. Visit www.cvlkra.com. On the home page, on the bottom right hand side, you will see a small tab “client login". Click on it, key in your PAN, date of birth and choose from among the many intermediaries (it could be a mutual fund in which you have invested or a broker through whom you had invested), and then hit “login". On the screen that appears next, click on the tick mark near “KYC verified". Another page will appear. Scroll down to see all your personal information that forms part of the KYC requirement and see which details need revision. As of now, this facility is available only with CVL KRA, said Visharia. For KYC done through other KRAs, you could visit their offices, write to them or get in touch with your agent or broker to get to know which details are stored with them.

If your mutual fund investments are scattered across many folios, we suggest you consolidate them. Each investment made into a scheme within a fund house has an account number. And all such account numbers typically get bunched in one folio number, if you want. Think of an account number like a file and a folio to be a drawer. To get a consolidated view of your mutual fund investments, it’s always desirable to have a single folio per fund house.

For those who have been investing for long, chances are that they have multiple folios within the same fund house. If the mode of holding (first holder/second holder and so on) is the same, it’s better to merge the folios. “Earlier, mutual funds used to give incentives to distributors to collect as many forms as possible. Now, that’s gone," said the head of the client servicing department at one of India’s largest fund houses requesting anonymity. It makes sense to consolidate your folios to get a comprehensive view of your statement.

“People have little awareness when it comes to consolidation so we don’t get too many requests to consolidate," said Himanshu Vyapak, deputy chief executive officer, Reliance Capital Asset Management Co. Ltd, adding that even if an investor has separate folios, some fund houses and online distributors give an option to link their folios online so that a consolidated view of holdings is available.

Most of us delay our tax-savings investments till the last minute. Take the case of equity– linked savings schemes (ELSS). In the past five years, 30-50% of annual inflows into ELSS have come in the last three months of the financial year (January to March). Of the 6.3 million total ELSS folios, systematic investment plan (SIP) folios are just 540,000, or 8.6%. Remaining folios constitute of lump sum investments in ELSS.

Instead of putting off your ELSS investments to the last minute, why not do it throughout the year, through a SIP from the start of a financial year.

So far, the number of ELSS investors who invest in lump sums has been higher than those who come through SIPs, “though SIPs in ELSS are increasing", said Vyapak.

With SIPs in ELSS, one must remember that there is a lock-in of three years for each instalment. So, don’t start a long-tenored SIP in it, like you would in an open-ended equity fund. If there is a change in management or you aren’t happy with the new fund managers or if they aren’t able to replicate the earlier success, it’s best to reduce exposure gradually. But to do that, you have to wait till the lock-in is over. An ELSS SIP of one or two years is ideal.

Ideally, all mutual fund folios must have a joint account holder to ensure that there is a succession plan in place. The problem is that you cannot add a joint account holder midway. “That’s because adding an account holder is tantamount to a transfer of a security. And mutual funds are not transferable securities," said the client service expert quote earlier.

The way out is to add a nominee, if you don’t already have one. A nominee is a trustee of your money. She is entitled to the money (in case your folio doesn’t have a joint account holder) and also has to ensure that it goes to the rightful heirs. Most fund houses allow you to add multiple nominees. You can add a nominee midway into your investment tenor.

Such basic hygiene steps go a long way in smoothening your investments and ensuring that you don’t face trouble later.

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Published: 31 Mar 2015, 05:56 PM IST
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