I fall in the highest tax bracket and my investments are: LIC Money Plus (Rs10,000 per annum); ICICI Pru Lifetime Super Growth (unit-linked insurance plan, or Ulip, of Rs5,000 per month); HDFC Child Plan (Rs5,000 every quarter); another LIC policy (Rs2,000 per annum); Public Provident Fund (PPF) (Rs70,000 per annum). I also have a fixed deposit worth Rs13,000 and National Savings Certificate worth Rs10,000. I want to invest in mutual funds (MFs). Please suggest some funds and also tell whether my investments are right.
You have a huge exposure to Ulip which needs to be trimmed and except PPF, there is no other regular savings. Check how many premiums you have paid so far. Typically, the minimum time period is three years. However, each policy comes with its own features. Evaluate their performances. If you have dependants, you need a life cover and so consider buying a term plan. In addition make sure you and your family are adequately protected with a health cover. Any regular savings which you plan should preferably be done in MFs and through systematic investment plan. Start building your MF portfolio with hybrid equity funds such as HDFC Prudence, Tata Balanced Fund, DSP BlackRock Balanced Fund and Birla Sun Life 95.
I am 26 years old and earn Rs24,000 per month. My investments are: PPF (Rs1,000 per month); Bajaj Allianz Ulip (Rs12,000 per annum); ICICI Pension Plan (Rs20,000 per annum); Reliance Regular Savings Fund (Rs2,000 per month); SBI Magnum Tax Gain (Rs2,000 per month); Kotak Select Focus fund (Rs2,000 per month); BNP Sundaram Smile fund (Rs2,000); Tata Growing Economies Infrastructure Fund Plan A (Rs10,000 invested in April 2008). Is my portfolio on track?
Your savings rate of 50% of your total income is good. And the equity debt mix of 85:15 is in sync with your age. However, you need to analyse your Ulips. In case your policy has finished three premium years, it could have acquired a surrender value. But the same may not be true for the pension plan. You need to evaluate the charges along with the performance of the policies consider surrendering them. Coming to your mutual funds, SBI Tax Gain and Kotak Select Focus have been average performers. Consider funds such as Fidelity Tax Advantage for tax saving and HDFC Equity in the diversified category. Sundaram SMILE has been a good performer and can be continued. Tata Growing Economic Infrastructure Fund was launched when the markets were going through a turbulent phase. The fund has not performed as per the expectation and has been a under performer. Consider getting out of this fund and reinvest the same in the existing SIP.
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