Why declutter and consolidate your investment portfolio
If you are holding multiple folios within the same fund house you can choose to consolidate your folios.
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.
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.
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.
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.
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.
MUTUAL FUND INVESTMENTS ARE SUBJECT TO MARKET RISKS, READ ALL SCHEME RELATED DOCUMENTS CAREFULLY. Read more