How To Manage & Maintain Investment Documents and Financial Papers

what problem the family faces when somebody dies without keeping any records of his/her investments? How to recover them etc. Now, we will know what are the documents required for each type of investing or saving, what document the company provides to you, how to keep the documents and give access to your family, etc. What are the common documents required for Saving and Investing?

PAN CARD – This is the first most important and almost mandatory document required for investing in any asset class in India. PAN number is frequently required for travelling abroad, buying Gold, Car, and property or opening a bank account, applying for a passport apart from normal investments. Remember, two-three things are very important here - Name, Date of Birth and your signature. The name should be correctly spelled else chances are everywhere your name will be wrong. Check the date of birth as it is a valid document for your age proof. Put in the same signature as you put elsewhere while applying PAN Cad as it also used as your signature proof. Needless to mention your father name should also be correct. Please note these informations are printed on the PAN Card. You should also give correct and complete address while applying PAN CARD as your INCOME Tax refunds are sent to this address only even if you give different address while submitting IT returns. Remember, the address is not printed on the PAN Card. In case of you find any details as wrong, do not worry as you can get them rectified by filing up the rectification form and submit with the proof of what you want to change – download fromhttp://www.incometaxindia.gov.in/Archive/ChangeForm.pdf.. You can also verify the details of your PAN athttps://incometaxindiaefiling.gov.in/portal/knowpan.do On-line applications can also be made athttps://tin.tin.nsdl.com/pan/index.html and/ or athttp://www.utitsl.co.in/utitsl/uti/newapp/newpanapplication.jsp

PASSPORT – This is another important document used commonly as you proof of identity, Date of Birth and address.

TELEPHONE (LANDLINE) & ELECTRICITY BILL – These are commonly used as your address proof while applying for PAN Card and Passport or open a bank account 

BANK ACCOUNT – These days in India, every investment requires your bank account details. The less number of bank accounts you have the better it is. Commonly asked document is your Cancelled cheque copy and photocopy of your bank statement or bank pass book. Nowadays, all maturity payments, redemptions, interest and dividends are directly credited to your bank account. Therefore, I suggest that you select one bank account for all your investments so that you can track what is coming and what is not?

KYC – This is another document which is a pre-requisite for investing in Mutual Funds. For doing a KYC your photograph, address and identity proof is required. A Mutual Fund Advisor will do the needful. However the status of same can be viewed at http://www.cvlkra.com/kycpaninquiry.aspx. KYC is also required for opening a share trading account but that is done separately while opening the account and it is built-in inside the account opening form.

IT RETURN COPY – After Submitting your Income Tax Return you get this acknowledgment copy which needs to be kept safely as these are frequently required for large value transactions, your foreign travels, sending your kids overseas for higher education and seeking personal, Home or education Loans. COMPUTATION OF YOUR INCOME/NETWORTH – Again, this is mandatory along with wherever your IT return copy is required. Without this you can not apply for Home, personal, educational or business loan. Now, let us discuss what documents do you get against which investment?

LIFE INSURANCE POLICY – A policy Bond/ document wherein a complete detail of the policy terms along with policy number, Nominee name etc. is printed. This document is very important as the original is needed in case of a claim or maturity.

GENERAL INSURANCE (example – Mediclaim, Car etc.) – A Policy certificate is issued by the company which is normally valid for one year. You get a new certificate each time you renew else the policy gets lapsed. Along with this you will also get a Card with your photo and insurer details for showing to the hospital. 

MUTUAL FUND – Here you don’t get a Bond instead you get an Account Statement which has a FolioNo. or Account No. Each Mutual Fund Company gives a different Folio number as per their system. Therefore if you have invested across 15 schemes of different companies then you will have minimum 15 statements. However, this can be reduced by maintaining multiple schemes of each company under one folio.

PUBLIC PROVIDENT FUND (PPF)– You should get the passbook updated at the beginning of each financial year (FY) – this gives you a complete picture of total contribution made in the entire FY including interest credited and the total balance lying at the end of the FY. Income Tax rebate can be claimed under section 80C (for the amount contributed during the FY – maximum contribution one can make is 100,000 per FY) by submitting a copy of this passbook.  

POST OFFICE SCHEMES – Like PPF, here also you get passbooks which need to be updated annually for the same reason as PPF. Some schemes do offer IT rebate therefore, you need to account them.

BANK ACCOUNTS – you either get a Quarterly or monthly statement or a passbook. This needs to be preserved for future and past references and in some transactions providing 6-12 months bank statement is mandatory. Needless to mention you also get the cheque book. Here, apart from the account number two more informations are very important – MICR CODE NO. this is a 9 digit number printed alongside the cheque no. and IFSC/RTGS Code, this is a 11 digit number printed on top of the cheque or on the first page of the cheque book. Remember these numbers are used frequently for on-line transactions as well as getting direct credits in your account.     

SHARE TRADING AND DEMAT ACCOUNT – Though you provide lot of documents here, but you only get the trading account code and demat account details from the Broker. You should insist and obtain a photocopy or scan of the entire set of documents or check with your broker as some provide links for downloading the documents from their websites. Now, we will discuss how to preserve or protect these documents? This is very simple but commonly avoided or neglected by investors and most of the time we do find them when required due to improper maintenance of records. Here, we have to use common sense. Each person might think differently in protecting or tracking them, but here are some simple ways – keep original copy of all the receipts scanned or photocopy in a file or folder. I suggest, for each policy one should maintain one file/ folder as you are supposed to keep all renewal receipts. You can keep the scan copies in separate folder in your computer. For each investment a seperate file should be maintained. Keep the Life Insurance policy Bond in your Bank Locker as you will not require them before maturity or claim  Keep all Passbooks and cheque books in one place under lock and key. Do not keep and blank signed cheque. Keep your Demat account book also under lock and key as these are like blank cheque and required when you sell some shares. Remember, not to keep the book with you broker Mediclaim policy card should be kept in a place where it can be accessed instantly during an emergency. If you do not provide the details during emergency/ admission in the hospital you will not be able to claim the medical expenses. Now, most important – Keep every details maintained in an excel file wherein monthly/ quarterly/ half-yearly/ Annual payments of Insurance premium and others should be maintained. Those not using excel should maintain all the details in a register. Those who are very familiar using computers and internet the best way is to scan all the documents and keep them in separate folders and put it in cloud using www. dropbox.com - Dropbox is a free service that lets you bring all your photos, docs, and videos anywhere. This means that any file you save to your Dropbox will automatically save to all your computers, phones and even the Dropbox website. Dropbox also makes it super easy to share with others, whether you're a student or professional, parent or grandparent. Even if you accidentally spill a latte on your laptop, have no fear! You can relax knowing that Dropbox always has you covered, and none of your stuff will ever be lost. Now, the last thing and the most important purpose for which this whole article is written. Share  the details with your family. I am not saying you give access of everything to every one! At least your spouse or your grown up children (on whom you depend or confide in) should know this. I think, we all invest or save and protect our families only, so what is the harm if they know? Let them not get horrified or face a horror story in case you are not there. 

2015 Keep Your Financial Always on Check

I recently learnt a very important lesson in goal-setting and habit-forming from a medical doctor. A persistent bad back has me visiting the orthopedics more than I like. They all say the same thing—regular exercise is your panacea. Not marathon running but just a simple, regular workout. I find that I begin well enough, but two months later regress into inaction. Travel, the big destroyer of routines, is the usual excuse for not finding the 30-40 minutes to do what is needed. Then this one guy sits me down and tells me: just do these three exercises. Do them twice a day. Don’t skip. Don’t do more if you have no time. Don’t do three sets of 10 each if you don’t have time. Do each just once. But do them. I hear him. And start. That’s it. The goal became smaller. Much more manageable, and one that did not require a full 30-40 minute time slot in the morning. I find that when one set is done, there is always space to do one more. And when three exercises are done there is always the space to do 10 more. The doctor did two things that worked. One, he set a small enough goal that he knew is manageable. And if I say I can’t do even that, I’m not serious about getting better and can look for another doctor. Two, he set a habit-forming default. So the day there is pressure on time, it takes less than 10 minutes to get through the routine. On days when there is time, I can take the full 30-40 minute module. I’ve always been fascinated by the synchronicity between finance and health. We mean to get both in order but keep putting off the actual doing. The benefits of getting a grip for both are in the distant future—and the human being is not very good at delaying gratification. If it is the everyday habit that is the tough part of health, it is the toughness of the problem that makes us put off translating the thought into action in finance. In fact, Daniel Kahneman in his book, Thinking, Fast and Slow, presents research on how the human brain, when faced with a tough decision, takes the easier way out of either not deciding at all or getting distracted with irrelevant details that are familiar. For example: when faced with a decision on long-term investing, rather than sift through the 5,000 products out there, we will use some crutch to make a quick decision. This could be reading about a particular product in the media. Or seeing an advertisement for another product. Or simply getting influenced by the nice manner of the sales person selling a third product. For those as challenged in finance as I am in health, here is the two baby step approach to financial health. One, make goals that are doable. For instance, do not try and solve the problem of retirement planning at one go (unless you are working with a financial planner). Start by identifying how much you are able to save each month after you’ve met all your basic expenses. Write down two numbers. The first is the minimum you can save and the second is the maximum you can do. The first number will be the amount left over after all the discretionary spends on holidays, entertainment, eating out has been made. The second number is the potential of saving that you have if you cut out harshly everything other than the most basic spends. Our goal is a halfway house between these two extremes. Write that down. This is your savings target each month. Two, know what to do with this money every month. This is the key habit-forming step. You will not allow it to accumulate into one mass in your savings account to be invested at one shot at the end of the year, but will take a decision to find an instrument to soak up this money each month. If this decision is taking time and effort, do one of two things. Open a two-in-one account and sweep the money into a fixed deposit (FD) each month or keep moving the money into a short-term debt fund each month. If you can’t choose the fund, stay with the sweep-into-FD strategy, but do not leave it in the savings deposit. The two-step way inculcates the regular saving habit and allows you to see your own saving potential when you look at the FD balance or the debt fund corpus after six months. On the bigger question of money advice for 2015. The advice remains consistent—there is no change in what I recommend as product choices. Gold is no more than 10% of your portfolio. The core of your money box is in zero-risk products such as provident fund, Public Provident Fund and FDs. The rest of your investments are in equity-linked products, ideally mutual funds. You have an emergency fund that covers six months of your living costs. You have a pure term life insurance policy. And, you have a medical insurance policy. (from ONE Browser)

NITI AAYOG WIll REPLACE PLANNING COMMISSION...PM WILL BE CHAIR PERSON

The 65-year-old Planning Commission was today replaced by a new body, NITI Aayog or National Institution for Transforming India, which will serve as a policy think-tank for the central as well as state governments and have Prime Minister Narendra Modi as its Chairperson. The NITI Aayog will have a governing council comprising all state Chief Ministers and Lieutenant Governors and will work towards fostering a ‘co-operative federalism’ for providing a “national agenda” to the Centre and States. The body will have a CEO and a Vice Chairperson, to be appointed by the Prime Minister, in addition to some full-time members and two part-time members, while four union ministers would serve as ex-officio members. The Planning Commission, known as a socialist era institution, instead had a Deputy Chairperson. Besides, there would be specific regional councils, while experts and specialists from various fields would be there as “special invitees nominated by the Prime Minister”. NITI Aayog will serve as a ‘Think Tank’ of the Government as “a directional and policy dynamo” and would provide the governments at the Centre and in states with strategic and technical advice on key policy matters including economic issues of national and international importance, an official statement said. NITI Aayog follows Prime Minister Narendra Modi’s announcement in his Independence Day speech in August 2014 that there is a need for replacing the Planning Commission by a new body keeping in view the changed economic scenario. The government has set up the new body through a Cabinet Resolution, wherein it has invoked words of leaders like Mahatma Gandhi, B.R Ambedkar, Swami Vivekanand and Deen Dayal Upadhyaya. While the two part-time members would be from leading universities and research organisations, the number of full time members has not been specified as yet. As per the Resolution, the NITI Aayog will provide a ‘national agenda’ for the Prime Minister and Chief Ministers to foster cooperative federalism while recognising that “strong states make a strong nation”. It will also interact with other national and international Think Tanks, as also with educational and policy research institutions. (from ONE Browser)

Happy New Year

At the end of a very fruitful year, I write in to connect with you and express my gratitude in your support to my endeavors.

I take this opportunity to wish you and your family compliments of the festive and holiday season. I wish that peace, love and prosperity follows you always and forever!

Seasons Greetings and Best Wishes for the New Year 2015!