Choosing between single or joint account in MF investment

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Mutual funds are now the favourites of investors for the ease of buying, keeping track and maintenance. For their mutual fund holdings, investors can choose between two types of accounts – single or joint account. Under a joint account, investors can either choose between joint or or survivor modes of operation.

What’s better between single and joint accounts, let’s find out.

A single account means the investment will be in your name only. On the other hand, a joint account means shared ownership – that is, the investment in one account will be in the names of two people.

In mutual funds, you can also make a relative or friend a joint account holder. Moreover, having a joint bank account is not necessary to create a joint mutual fund holding. You can purchase mutual funds from your own bank account.

Generally, a single account where a nominee needs to be named is considered better.

In case of the account holder’s death, the nominee gets access to the account and the money.

In case of joint account, there could be some operational issues. Technical issues related to transactions can arise and there is also a risk of legal disputes.

Therefore, most financial experts advise to choose ‘either or survivor’ as the mode of operation in a joint account.

Recently, SEBI announced an exemption from mentioning a nominee in joint mutual fund accounts.

Until now, not having a nominee in a single or joint mutual fund account risked the account being frozen.

But with the new directives, mentioning a nominee is not required in a joint mutual fund account.

Financial experts say that most couples opt for a joint mode of operation in their mutual fund accounts.

But in such cases, issues related to online transactions arise.

Many platforms or websites of asset management companies are not equipped to handle multiple OTPs. And you may have to submit physical forms or cheques for transactions. However, by choosing the ‘either or survivor’ mode, you can easily conduct transactions.

Joint holdings can also face legal issues, especially in case of divorce, there could be disputes over ownership.

Another issue is that holder deletion, i.e. removing one name, can only be done in situations like divorce or death.

Additionally, if a joint holder passes away, the survivor has to add a nominee as well.

One advantage though is that if the first holder dies, the second holder can continue investing in the mutual fund. Considering the issues with joint accounts, experts recommend single holding for mutual funds.

However, in a single account, after the holder’s death, the nominee will need to submit necessary documents to gain access to the mutual fund folio.

On the other hand, in case of joint accounts, AMCs take less time for transmission or inheritance process. This is because the joint holder’s KYC is already done. Whereas in single accounts, they have very little information about the nominee.

So after considering all these aspects, choose your mutual fund account type as per your needs and priorities…