My husband is 41 years old and earns around Rs 60,000 per month. We have not been saving or investing enough and want to start investing Rs 10,000 through systematic investment plans (SIPs). We have Rs 50,000 and are looking for avenues to invest. Is it prudent to invest in a lump sum? We have identified HDFC Tax Saver, HDFC Equity, DSP BlackRock and Reliance Growth. Is the portfolio fine or do we change or add a fifth fund? We have an endowment plan, but my husband does not have any health insurance cover. We plan to take a term plan for Rs 50 lakh and a health cover. Both term and health insurance are expensive, so should we go for a combination of health and term plans?
It is time now to get serious about your investments. Yes, start with Rs 10,000 per month and going forward see if it is possible to increase your savings. The idea is to save the maximum.
As far as the number of funds are concerned, don’t have too many funds. Five funds right now look too many. Stick to three funds.
In two funds you can start your monthly SIPs. You have not mentioned the scheme in DSP BlackRock, otherwise the schemes you have chosen are all good.
The third fund can be used for investing the one-time amount of Rs 50,000. This can be done through a systematic transfer plan (STP). Since your savings are currently limited, it is preferable if you don’t invest a lump sum in equity and instead stagger the investment over a period of time. STP works exactly like a SIP investment, except a basic difference: in SIP, the monthly investment is debited from your bank account; in STP, the amount is transferred from an existing scheme to another.
Going for a term cover and health insurance is highly recommended. However, check how much is your existing cover and take a term insurance for the balance amount. As far as your concern on term and health being an expensive proposition, you should understand the implication of not having the same. It is money well spent and will help you achieve financial independence in the long run.
Surya Bhatia, certified financial planner and principal consultant, Asset Managers
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