Things you must take care to remain wealthy

About a month ago Shaila ji and her daughter Neeta came to my office. Shaila ji must be around 75 years old and Neeta was 45. They had come with two boxes full of papers and files. Shaila ji's husband Ramesh bhai died in Oct 2008 after a long illness.

Over the years he had invested in variety of securities viz. direct equity, mutual funds, bonds and debentures, post office savings schemes, fixed deposits etc. He also had several life insurance policies. All these were purchased in the names of all the family members and in different combination e.g. some investments were in his and Shaila ji's name, some were in his name and Neeta's, there were some in names of Shaila ji and Neeta and vice versa. Family also had several bank accounts, DEMAT accounts etc.

However, like in most cases, records were not maintained properly. In those boxes there were shares that were not dematerialized, there were dividend cheques which were not banked, there were some stickers which had to be placed on face of old share certificates due to name change of the corporate. Files contained bond and debenture certificates, which had matured many years ago but were not sent for redemption. They also had savings bank accounts that had large funds lying in it but no business was transacted for several months.

As per Government of India requirements corporates have to transfer all those dividends that are not claimed for seven years by the shareholder to Ministry Of Corporate affairs. Similarly, bonds and debentures, which have not been claimed by the applicant after maturity for sometime, need to be transferred to Ministry of Corporate affairs. As per data available total value of these funds is somewhere between Rs 500 to Rs 700 crore and counting. Once these funds are transferred to Ministry, it is not possible to get them out.

Every year we read in newspapers large number of life insurance policies lapsing. Many of these policies lapse because people forget to pay premium. Sometimes people change their place of residence but forget to inform all the financial institutions where they have made investments about the change. This results in important communication being sent to old address, remaining unattended and eventually lapsing.

Record keeping, filing etc. play very crucial role in remaining wealthy. Most of us focus on choosing best investment options - top performing fund, highest return fixed deposit etc. However choosing best investment is like sowing best seed. Unless that seed in not nurtured with water and appropriate fertilizers are not provided, it will not grow into a beautiful plant and tree. Similarly, unless we do not nurture our wealth it will not grow for our benefit.

"Becoming wealthy is not a matter of how much you earn, who your parents are, or what you do.. it is a matter of managing your money properly."Noel Whittaker
 

Gaurav Mashruwala

The author is a Certified Financial Planner. He may be reached at gmashruwala@gmail.com

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