I am 47 years old and have been investing as follows: Rs 25,000 per annum in a money-back endowment plan, Rs 2,500 per annum in Public Provident Fund (PPF), Rs 36,000 per annum in Employees’ Provident Fund (EPF). I have also started systematic investment plans in HDFC Top 200 (Rs 1,500), Kotak 50 (Rs 1,500) about a year ago. I am also investing Rs 2,000 in Reliance Growth (since last three months). I want to know whether I should swap any of the funds. Are my investments fine?
Your investments in PPF and EPF are good and can be continued. However, keep in mind that these instruments have low liquidity. However, PPF does offer you liquidity in the form of partial redemption or loan. Similarly, EPF offers you the same withdrawal benefits for specific purposes. However, it is still advisable to create separate baskets and consider this debt asset class for the long term. As far as your monthly investments are concerned, you have exposure in two funds—HDFC Top 200 and Kotak 50—which are large-caps and one mid-cap fund, Reliance Growth. Instead of two large-cap funds, you can consider one and hence can stop Kotak 50 and instead can go for a multi-cap fund. Funds such as HDFC Equity, Prudential ICICI Dynamic are good options that can be considered.
Also in the mid-cap space, Reliance Growth has a good track record but has been not been one of the best performers of late. You may consider swapping the same for IDFC Premier Equity, DSP BlackRock Small-and Mid-cap fund, HDFC Mid Cap Opportunities fund.
You should also consider a hybrid equity fund in your portfolio. This, besides giving stability to the mutual fund portfolio, will also do well in volatile markets. Funds such as HDFC Prudence, HDFC Balanced, Birla Sun Life 95, and Prudential ICICI Balanced stands out as far as the scheme selection is concerned.
Now coming to insurance, you already have a money-back endowment fund. But you should prefer an insurance which actually covers your life. It does not mean that your money-back policy does not cover you. It does but the only challenge being it does not provide you sufficient cover. You should look at a term cover which primarily covers your life and hence is cheaper.
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