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Folio Number



Definition

The folio number is a unique reference code or number given to each entry or transaction in a company’s ledger, the primary accounting record. Its purpose is to easily identify and track transactions. It serves as significant data for cross-reference and record keeping in both paper-based and electronic accounting systems.

Phonetic

The phonetics of the keyword “Folio Number” are: /ˈfoʊlioʊ ˈnʌmbər/

Key Takeaways

  1. The Folio Number is an essential aspect of investment management as it is a unique identifier provided for every mutual fund portfolio. It is used to track transactions and investments.
  2. Folio Number is convenient for investors as it allows them to handle multiple investments under a single number, making it easier to track their investments.
  3. It also ensures privacy and security of mutual fund investments as every transaction requires the folio number for verification. It prevents unauthorized access to the investor’s records.

Importance

A Folio Number is of crucial importance in business and finance as it serves as a unique identifier or reference number for all shareholders investing in mutual funds. The allocation of Folio Numbers enables smooth and efficient monitoring, management and tracking of all transactions and investments made within a particular mutual fund by an investor. It simplifies record keeping, facilitates quicker retrieval of information, aids in avoiding discrepancies and provides a clear and organized tracking system. Therefore, a Folio Number is instrumental in maintaining accuracy, integrity and transparency in the mutual fund investment process.

Explanation

In the context of finance and business, a Folio Number serves a critical role in managing and tracking investments. It is akin to a unique identification number or key associated with a particular investor’s account with a mutual fund company. Whenever an investor makes an investment in a particular mutual fund scheme, a folio number is generated to record and track all transactions and holdings within that mutual fund scheme for the investor.The purpose of a folio number is to simplify and streamline the administrative process for both investors and mutual fund companies. It is used to access details about the holder’s account such as the various investments made, units purchased, and the Net Asset Value. However, it’s not just about record keeping, the folio number acts as a security feature as well. Only with the appropriate folio number can transactions or changes be made to the mutual fund account, helping prevent unauthorized access and providing an additional layer of security.

Examples

1. Stock Portfolio Management: If you are a stockholder in a company or perhaps numerous companies, you may be given a folio number for each share of stock you own. This number can help you and the company keep track of your investments. If you wanted to sell your stock, you would provide your broker with the folio number, and they would complete the transaction on your behalf.2. Bank Accounts: Banks also use folio numbers for their accounts. For instance, if you have several different accounts with one bank e.g., checking, savings, and a business account, each one of those accounts would be assigned a unique folio number. This helps both you and the bank easily distinguish and manage the accounts individually.3. Mutual Fund Investments: When you invest in mutual funds, you are assigned a folio number, which keeps track of your investment record. This reference number shows the type and amount of funds you’ve invested. It’s of great importance, especially while redeeming or switching between funds; the transaction will reference this number.

Frequently Asked Questions(FAQ)

What is a folio number?

A folio number is a unique number assigned by financial and investment institutions to each of their shareholders or mutual fund holders. This number provides an identity to the individual’s account and helps in its management.

How is a folio number used in finance and business?

A folio number is used to track all transactions and investments made through a specific mutual fund account. It can help in tracking the shareholders’ activities, including tracking their purchases, redemptions, and transfers.

Can a shareholder have more than one folio number?

Yes, an individual can have more than one folio number. Each time a new account is opened or a mutual fund is bought from a different fund house, a new folio number is issued.

Is the folio number confidential?

Yes, the folio number is confidential and should be kept secure. It is like a bank account number as it holds all the important information about your investments.

What is the importance of having a folio number?

A folio number enables investment companies to effectively track and manage investments and other transactions made by an individual in a particular mutual fund scheme.

How can I find my folio number?

Your folio number can usually be found on your account statement provided by the investment or mutual fund company. You can also contact your fund house or financial institution to retrieve it.

Can I change my folio number?

Usually, folio numbers are permanent and cannot be changed. However, some financial institutions may permit you to update or change it under certain conditions.

Is it possible to link multiple folio numbers?

Some fund houses allow you to link multiple folio numbers under one common account; however, policies may vary across different institutions. It’s recommended to contact your fund house for specific procedures or requirements.

Related Finance Terms

  • Dematerialization
  • Portable Document Format (PDF) Statements
  • Mutual Fund Investment
  • Asset Management Company (AMC)
  • Know Your Customer (KYC) Verification

Sources for More Information


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