May 2023
2 mins read

Why declutter and consolidate your investment portfolio

Whether it’s your office desk, wardrobe or portfolio, decluttering helps you organize things in a better way. When it comes to our finances, we may have invested in a variety of products through different intermediaries like banks, MFDs, insurance agents and opened multiple bank accounts. Keeping track of everything may become a challenge.
Here are a few benefits of consolidating your portfolio.
Sometimes, simplicity is better. When you keep all or most of your investments in one place, you just need to remember one username and password, and one customer support contact.
You can also save time and paper by reducing the number of individual statements you get, whether electronically or by mail.


Consolidate folios

If you are holding multiple folios within the same fund house you can choose to consolidate your folios. 

point 1

Prune your portfolio

Investing in multiple products can skew your asset allocation. The first step in decluttering your portfolio is to make a list of all the products you have invested in and identify products which can be eliminated from the portfolio. For instance, there is no point in holding multiple funds within a same category. You can exit funds/products which have similar investment objective or which are not performing well. 

point 2

Tax implications and exit loads

Be mindful of the tax impact and exit loads. Some products like ULIPs have a lock-in period of five years so you have no option but to wait till the lock-in gets over. Similarly, check the surrender value of your traditional investment plans before you surrender your policy. If the surrender value is less, you may have to keep invested for few more years to recover the charges. Policies can be surrendered only after you have paid premiums for 3 years.

Mutual Funds charge an exit load if you redeem before a the lock-in period. The exit load varies across categories and fund houses. You may want to wait till the lock-in period is over to avoid paying the exit load.

Equity Funds: Short Term Capital Gains tax of 15% + 4% cess is applicable on gains if you exit before 12 months. Long Term Capital Gains Tax of 10% is applicable on gains exceeding 1 lakh if the investment is sold after 12 months.

Debt Funds: Short Term Capital Gains are taxed at your slab rate if you exit before 36 months. Long Term Capital Gains Tax of 20% with indexation benefit is applicable if the investment is sold after 36 months.

point 3

Don’t mix insurance and investing

People often mix insurance with investment. Endowment Plans offer low life cover. Separate your term plan and your investment portfolio. 

point 4

Ideally, it would be better if you discuss all your finances with one financial adviser who can take care of your entire finances. A financial adviser should be able to give you a holistic review of your portfolio. 

PGIM India Asset Management Private Limited
(CIN - U74900MH2008FTC187029)
Toll Free Number: 1800 266 7446
Email: care@pgimindia.co.in
This is an Investor Education and Awareness Initiative by PGIM India Mutual Fund.
All the Mutual Fund investors have to go through a one-time KYC (Know Your Customers) process. Investor should deal only with the Registered Mutual Funds (RMF). For more info on KYC, RMF and procedure to lodge/redress any complaints, visit https://www.pgimindiamf.com/ieid.
The information contained herein is provided by PGIM India Asset Management Private Limited (the AMC) on the basis of publicly available information, internally developed data and other third-party sources believed to be reliable. However, the AMC cannot guarantee the accuracy of such information, assure its completeness, or warrant such information will not be changed. The information contained herein is current as of the date of issuance* (or such earlier date as referenced herein) and is subject to change without notice. The AMC has no obligation to update any or all of such information; nor does the AMC make any express or implied warranties or representations as to its completeness or accuracy. There can be no assurance that any forecast made herein will be actually realized. These materials do not take into account individual investor's objectives, needs or circumstances or the suitability of any securities, financial instruments or investment strategies described herein for particular investor. Hence, each investor is advised to consult his or her own professional investment / tax advisor / consultant for advice in this regard. The information contained herein is provided on the basis of and subject to the explanations, caveats and warnings set out elsewhere herein. The views of the Fund Manager should not be construed as an advice and investors must make their own investment decisions regarding investment/ disinvestment in securities market and/or suitability of the fund based on their specific investment objectives and financial positions and using such independent advisors as they believe necessary.