Multiple people can invest together in mutual funds

K. ARAVIND

Investing in mutual funds can be done by more than one person jointly. Certain conditions apply to investing in a joint account.

Two or a maximum of three people can be joint account holders. All joint account holders must comply with KYC (Know Your Customer) requirements. Those who have not submitted the information and required documents as per KYC rules cannot be included in the joint account.

It is now common for couples to take out joint loans and make bank deposits together. You can also invest in mutual funds. However, there are some things to keep in mind when investing in joint mutual funds through joint accounts to facilitate investment and withdrawal. It is important to understand this and decide which option to choose in the joint account.

There are two types of joint accounts. All joint account holders have an equal right to choose the joint option. Selecting this option will require the signatures of all joint account holders to buy and sell mutual fund units.

The second is the ‘Either or Survivor’ option. Under this option any of the joint account holders will have the opportunity to buy and sell units on their own. This does not require the signature of the other account holder or owners.

It is better to opt for the ‘Either or Survivor’ option to avoid any interruption in the transaction during the buying and selling of units.

Under this option, paperwork can be avoided and one of the investors can transact without interruption when required. At the same time, it is advisable to choose the joint option if the other investor or investor wants the investment partner to avoid making decisions on their own.

Only the first (first-holder) of the investors in the joint accounts will get the tax benefits. According to 80C, the tax benefit is available only to the first holder when investing through joint accounts in equity linked savings schemes and others. Therefore, when investing for tax benefits, it is advisable for all investors to opt out of the joint account and invest through special accounts if they want a tax benefit.

In case of death of the joint account holder or owners, the entire deposit will be in the name of the living account holder.