Hello Readers!
How are you all?
Many of you have heard about the joint bank accounts or maybe many of you have a joint bank account either with your parents or with your other behalf. Well, many people hold joint bank accounts, in order to make it more convenient to handle them.
Here if I say that you can have a joint investing account in mutual funds, then will you believe me! Yes, while investing in mutual funds, you can do it with a joint investing account. Investing under a joint name is considered convenient by many to avoid the legal hassles and delays caused for establishing successions.
Well, it is convenient in mutual funds to carry out the investing process, under a joint name, but at the same time, it does have some limitations. Let us know about them:
KYC Is Necessary For All
A joint holding can have two individuals as account holders, maximum it can also be three account holders. In mutual funds to avail of a joint investing, it is a must for every account holder to complete their KYC (Know Your Customer) registration.
When To Select The Mode Of Ownership?
While one fulfills the form for investing in mutual funds, at that time only he is required to select the mode of joint or either or survivor, which is the mode of ownership. It is a must for every investor to ensure that he selects the mode of holding while filling the application, else the mutual fund house treats default as joint.
Documentation
In both, the modes of joint investing that are in either or survivor, either of the unitholders can perform the financial transaction on the account while in simple joint account mode, to do any financial transaction, it is compulsory to submit the details of both account holders. In mutual funds, joint ownership is defined as equal rights and authority to all investors, which means to purchase or redeem units or perform any operations approval i.e. signature and details of all joint owners are required. The either-or survivor mode will allow either of the owners to transact on the account.
Benefit Of Joint Ownership
Joint ownership benefits the investor, in the case in case if he fears, that the other holder may take unilateral decisions on the investment. Joint Ownership also eases the process of transfer of mutual funds. This may also be useful to protect the rights of certain individuals as the rights of a joint holder supersede the rights of nominee in succession matters.
Taxation
Well, in a joint account, the main holder enjoys the benefit of taxation. The main holder gains the tax benefit from ELSS in the either-or survival mode of joint ownership. Similarly, the long-term and short-term capital gains taxation is picturized for the first joint account holder.
Nomination
The nominees of these joint accounts came into effect only after the death of both joint account holders. Added to this limitation, minors are not allowed to be part of joint mutual fund accounts.
Joint investing in mutual funds are recommended for those who are in search of a solution to secure some investments exclusively for an immediate family member such as their spouse. If you are also searching for the same, then do a joint holding to ease succession and ensure financial security.
For any kind of query, you can contact us at Shri Ashutosh Securities Pvt Ltd., we are here to help you in any way possible.
Happy Investing!
(Mutual Fund investments are subject to market risk Illustrations are for example only, there is no guarantee of returns. Past performance is not an indicator/guarantee to future returns).