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Financial Planning - Proper documentation must

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Proper documentation of investments is one of the cornerstones of financial planning and has gained high significance in the light of increasing investment options and the complexities of some of these investments. Here, we take a look at the role of proper documentation in simplifying our lives and our ability to make informed investment decisions.


Need for documentation & compilation: Apt documentation gives us a firm grip of our investments, providing us with a clear sense of where we are headed financially. Record-keeping of all investments made during the financial year is as important as the investment in itself. Normally, the approach to this is a little casual and one doesn't get the document or the required investment data at the relevant time to make the necessary financial decisions and accompanying tax concession claims. This further results in investments not being goal-oriented and their suboptimal utilization.


Know your client (KYC) details: All service providers follow a KYC format to capture details about their clients. This record should always be precise and up to date with all the regulators and service providers. This will be the first and the most important step to ensure all relevant data is received at the correct address if the same is in physical form, and right e- mail ID if the same is required to be received electronically. The accompanying table gives some idea about the importance of registering correct information for each of the data-points in the KYC and the possible consequences if the data is incorrect or not updated.


Role of proper documentation: Once the key data points are captured correctly in all the investments, important information can be elicited from the statements and can then be put in a tabular form. This information can then help in taking various financial decisions.
Essential data to be captured in the table are type of investment, payment dates, interest payout dates, investment maturity dates, investment cash flows, investment valuation, etc. The table allows us to track regular payments towards various investments, maturities of investments, our commitment timelines, etc. A premium not paid on time can result in lapse of a policy with serious consequences.


A matured FD, if left unattended, may earn an SB account return on the corpus till reinvested, thus resulting in huge opportunity losses. Regular updation of investment valuations will alert an investor if the investment is not delivering desired returns and would allow him/her to plan for alternatives. This also helps in an easy throughput in case of any change in one's location of stay, change of advisor, etc.

Storage of statements: It is important to regularly store (electronically) all the bank, demat, MF and portfolio statements, e-statements, copies of insurance policies, e-contracts and other relevant documents. This would be immensely helpful during the financial year-end tax compilation. In particular, the bank and demat account statements of the entire year are required for year-end tax computation purposes and these would also be very handy in case of any I-T scrutiny.


This process helps in being on top of things and being self-dependent in these important matters, and secure your life's savings.

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