Your parents are losing money! Stop this bleeding now; here is how
Usually, parents’ monies are found lying in various savings account or invested in fixed deposits, insurance, real estate, gold, Public Provident Fund, bonds, loans to real estate builders, etc. Some may have invested in stocks/mutual funds, etc.
Usually, parents’ monies are found lying in various savings account or invested in fixed deposits, insurance, real estate, gold, Public Provident Fund, bonds, loans to real estate builders, etc. Some may have invested in stocks/mutual funds, etc. Due to deteriorating health, key decisions on investments get neglected and this causes more problems for senior citizens, if not attended to on time.
We experience many such instances of families trying to make sense of the papers accumulated over time, trying to figure out what to keep and what not to, where to stay invested in, whom to follow up with to recover loans, etc. Here is a checklist to spot the usual problem areas and also some action points that could help you manage your parents’ portfolio better:
Check for monies lying across various savings bank accounts drawing 4% pre-tax returns for years. Usually, pension (invariably unutilized) keeps accumulating in these accounts. Check if a second account holder is present, and if not, ensure that least a nominee has been updated in the bank accounts.
Move the monies into long-term investments other than what is needed for an emergency. If possible, consolidate multiple bank accounts. Monies lying in FDs gives a post-tax return of 4%, that does not even beat inflation. Move this money to safe instruments like debt funds or tax-free bonds.
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Check for articles inside bank lockers. Identify empty lockers that continue to be charged an annual fee. Make a list of all the things in the locker documents, gold, silver, artifacts, etc, and help parents identify whom they wish to gift these to or check if they wish to sell them.
Withdraw PPF funds once they mature and move them into long-term investments like MFs or stocks.
Unclaimed dividends keep accumulating where shares are not dematerialized and not linked to bank accounts. Get a proper paper trace of all physical shares, dividend warrants, dematerialize the stocks, update bank accounts for receiving e-dividends and reclaim unclaimed dividends.
Check all bond certificates that are yet to mature and dematerialize them. Check if insurance policies are about to mature or lapse or are already in a lapsed state. Check on club association /memberships and check if children can be added to them.
Study real estate documents and check for joint holding and nominations in all documents and share certificates. If need be, help your parents sell some of them to move into encashable investments.
Ensure that all documents - whether physical or soft copy - are available for all bank accounts, fixed deposits, lockers, demat accounts, broking accounts, properties, jewellery, vehicles, insurance papers, art, personal effects, etc.
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Help your parents make a will. This enables them to write down whom they wish to give their assets to. For ailing parents, it may be necessary to get a Power of Attorney made for either parent.
By: Chitra Iyer
(The writer is CEO of My Financial Advisor)
Source: DNA Money