ET BureauWith many beginners rushing into mutual funds, money managers believe they should be careful with their paperwork, bank account, nominee and choice of the proper scheme.
WHAT DOCUMENTS ARE NEEDED TO START MUTUAL FUND INVESTMENTS?
To start your mutual fund investments, you need a PAN card, proof of address (such as Aadhaar), and a copy of a cancelled cheque. While making a physical investment (offline mode at a fund house office or distributor), you would need these copies and need to mention the details correctly. Write the name in the MF application as per the PAN record. If there is a mistake, get it rectified in the PAN record. The income tax department has instructed MF registrars that the name and date of birth of an investor appearing on the PAN record and the mutual fund folios should match completely. If there is a mismatch between the name or the date of birth, the registrar will reject the transactions, including SIPs (systematic investment plans) and redemption requests.
WHY IS IT IMPORTANT TO CHOOSE THE RIGHT SCHEME?
The right scheme for investment should be chosen based on the time horizon, risk profile and tax implications. For example, if you are looking to invest for a 1-2 year horizon and can take some risk and want tax efficiency, you could choose an equity savings fund rather than a pure equity fund or a debt scheme. If you choose a debt fund, the gains will be subject to tax in line with your income, while an equity fund could lead to losses in the short term if markets go down. Changing a scheme mid-way could lead to an exit load or higher shortterm capital gains tax.
WHY IS IT IMPORTANT TO LINK AN ACTIVE BANK ACCOUNT TO THE FOLIO?
Whenever you wish to redeem an MF scheme, the money is credited to the bank account mentioned in the account opening form. Hence, do not let this account go dormant. Also, do not close it without first updating your folio with a new bank account. If you place a redemption request and the fund house cannot credit your account directly, a cheque will be sent, which could take 5-7 days more to get encashed.
WHY IS A NOMINEE IMPORTANT IN YOUR MF FOLIO?
It is important to make the right nomination as that ensures your loved ones receive their rightful share promptly and without hassles and complications. In case you wish to have more than one nominee, you can add them and mention the percentage share for each of them.
WHAT DOCUMENTS ARE NEEDED TO START MUTUAL FUND INVESTMENTS?
To start your mutual fund investments, you need a PAN card, proof of address (such as Aadhaar), and a copy of a cancelled cheque. While making a physical investment (offline mode at a fund house office or distributor), you would need these copies and need to mention the details correctly. Write the name in the MF application as per the PAN record. If there is a mistake, get it rectified in the PAN record. The income tax department has instructed MF registrars that the name and date of birth of an investor appearing on the PAN record and the mutual fund folios should match completely. If there is a mismatch between the name or the date of birth, the registrar will reject the transactions, including SIPs (systematic investment plans) and redemption requests.
WHY IS IT IMPORTANT TO CHOOSE THE RIGHT SCHEME?
The right scheme for investment should be chosen based on the time horizon, risk profile and tax implications. For example, if you are looking to invest for a 1-2 year horizon and can take some risk and want tax efficiency, you could choose an equity savings fund rather than a pure equity fund or a debt scheme. If you choose a debt fund, the gains will be subject to tax in line with your income, while an equity fund could lead to losses in the short term if markets go down. Changing a scheme mid-way could lead to an exit load or higher shortterm capital gains tax.
WHY IS IT IMPORTANT TO LINK AN ACTIVE BANK ACCOUNT TO THE FOLIO?
Whenever you wish to redeem an MF scheme, the money is credited to the bank account mentioned in the account opening form. Hence, do not let this account go dormant. Also, do not close it without first updating your folio with a new bank account. If you place a redemption request and the fund house cannot credit your account directly, a cheque will be sent, which could take 5-7 days more to get encashed.
WHY IS A NOMINEE IMPORTANT IN YOUR MF FOLIO?
It is important to make the right nomination as that ensures your loved ones receive their rightful share promptly and without hassles and complications. In case you wish to have more than one nominee, you can add them and mention the percentage share for each of them.
Get Unlimited Access to The Economic Times
