Single vs joint holding in mutual funds: which is better?

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Single or joint accounts: These are the two types of accounts that investors can opt for to keep their mutual fund (MF) holdings. For the joint account though, an investor can choose between ‘joint' and ‘either or survivor’ modes of operation. So which of these account types is better? Typically, a single account that only requires a nominee is better.

On the death of the account holder, the nominee gets access to the account and the proceeds. Joint accounts can be problematic. There are technical difficulties involved with transactions and they can also open up the risk of legal disputes.

Most financial experts favour a joint account with ‘either or survivor’ as the mode of operation. A single account implies that the investment is held in your sole name. A joint holding means shared ownership.

However, unlike in the case of bank savings accounts, MFs allow relatives or friends, and not necessarily your spouse, to be the joint account holder. Moreover, you do not need a joint bank account to create a joint MF holding. You can fund your MF purchase from any of your own bank accounts as well.

Financial experts say that most couples tend to opt for accounts with the joint mode of operation. In such cases, difficulties arise with online transactions. Many platforms and websites of asset management companies are not geared for multiple OTPs (one-time passwords) and you are forced to submit physical forms and cheques for transactions.

However, if you choose either or survivor mode, then you can transact online smoothly. The second problem with joint holding is the possibility of legal disputes. The second or third holder may claim the asset as his or hers even though they could have been created from your personal funds