I have the following shares in my portfolio: Larsen and Tubro (850 shares), Areva T&D (2,000 shares), Reliance Industries Ltd (65 shares), Reliance Communications (500 shares), Reliance Power (200 shares) and Reliance Natural Resources (2,500 shares). I have a horizon of at least five years. Do I need to reshuffle my portfolio?
Your portfolio is quite good but not properly balanced, therefore, it is likely to yield you average returns. You must add some better priced stocks to balance your portfolio. In my opinion, a metal stock such as Hindalco Industries, Steel Authority of India Ltd or Jindal Steel and Power should be added. In addition to this, you should look out for Alstom Projects India Ltd on correction. In the cement sector, you may consider Ultratech Cement.
While a government-owned bank such as Canara Bank or Bank of India should also be considered. In the mid-cap space, I would prefer Praj Industries, Power Finance Corp., Power Grid Corp., etc.
I have some queries regarding mutual funds: 1) Please suggest some safe and tax-efficient alternative to bank deposits. 2) What has gone wrong with Franklin India Blue Chip Fund? 3) I have been investing regularly through systematic investment plans; how it will give me a regular monthly income? 4) Can the investments made originally in single name be converted into joint names now? 5) Can the option, i.e. growth or dividend payout or reinvest, be changed at later date?
Regarding your first question, safe and tax-efficient alternative to bank deposits are infrastructure bonds. They normally offer you returns which are better than bank deposits; moreover, the returns are tax-free. So, if you are looking for some tax-saving alternative with a view of safety, then I think this is a good option. Regarding your second query, there is nothing wrong with Franklin India Blue Chip Fund. It is a below-average risk scheme with average returns. However, if you’re a long-term investor, then this fund could offer you decent returns due to its portfolio composition and sectoral classification. Regarding your third query, if you want a regular monthly income then you may choose to invest in a monthly income plan. Regarding your next question, investments made originally in one name cannot be converted in two names. However, you may sell the entire investment and invest again in two names. You may change your scheme option—growth or dividend payout—as per your choice.
I am 41 years old and need advice on investments for securing my retired life. Currently, I have only a savings account and a public provident fund account.
Suyog M. Panse
For a good retirement plan, you need to have a diversified approach. I would strongly suggest you to invest in mutual funds, which, though risky, are capable of giving high returns. You may choose to invest in stock markets also, but since the risk associated in secondary market is more, it would be advisable to build a portfolio from decent and well-priced initial public offerings, as this can yield good returns.
Now, to balance your portfolio, you may have some debt and deposit components, and can invest in bonds and public provident fund. This will also take care of your taxes. So, essentially you should make a portfolio which is diversified and not mutually exclusive of other investment options.
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