My late father had invested Rs 1,000 in SBI Magnum Multiplier and had opted for a dividend option around 10 years earlier. He, however, had made no nominees for this investment. I have been receiving dividend cheques and am unable to encash these. How do I transfer these benefits and ownership of the fund?
-Subhash Dutta
A mutual fund document seeks a nominee at the time of application. However, one has the option to leave it blank, as it is not compulsory. It is likely your father did so. You must inform the fund house about your father’s demise, in case you have not done so. Next, you need to check with the fund house if there is a nominee that your father mentioned when he made his investment. You will then need to produce a succession document, indicating you as the legal heir and beneficiary. It is only after this process that you can get the fund transferred to your name and the pending dividends.
I want to start investing Rs 1,000 a month through a systematic investment plan (SIP) in five mutual funds. Suggest some good funds and how to start it. Can I do it through net banking with my savings accounts, as I don’t have a demat account?
-Ajay Shukla
We would suggest you don’t go overboard with five funds, as you are just starting out. Start with two good balanced funds, such as DSPBR Balanced, HDFC Prudence or Reliance Regular Savings Balanced, and spread Rs 2,500 in each of them.
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Demat account is not mandatory to invest in mutual fund, except for exchange-traded funds. You can invest online through your bank and even fund houses’ websites.
I have a 5-7 years investment horizon and wish to create a corpus of Rs 40-50 lakh at the end in this period. What should I do at present?
-V Kumar
To achieve your financial goal of building Rs 50 lakh in seven years, you need to invest Rs 37,885 every month that earns 12 per cent annual return in this period. You will need to invest in diversified equity funds, provided you can stomach some risk that comes along. You can start an SIP in any three-four funds such as HDFC Top 200, Birla Sun Life Frontline Equity Plan A, IDFC Imperial Equity Plan or DSPBR Top 100 Equity Reg.
I have made short-term capital gains of approximately Rs 1,200 by selling some of my mutual fund units. Do I need to report this when filing my tax returns? I come under the income tax slab of 10 per cent.
-D Venkata Rajeev
You will have to disclose the gains when filing returns. The rate applicable would, however depend on the fund type – equity-oriented or debt fund. For an equity fund, your short-term capital gains would be taxed at 15 per cent (plus surcharge and cess), whereas, in case of a debt fund, the short-term gains are added to your income and taxed according to your tax slab.
I bought some equity-linked savings schemes (ELSS) four years earlier under a dividend reinvestment option. I find myself trapped. This is because though the lock-in period of the original invested units is over, the dividend re-investment is like an endless cycle. How can I get out of this?
-Manish Gautam
Many investors face this problem. Fund houses allow you to switch from a dividend reinvestment option to a dividend option. For this, you need to write a letter requesting a change and/or fill a “change in option” slip at the bottom of your account statement.