I have a 24-year-old son, who is earning Rs5 lakh per annum. He is a bachelor and has no loan liability. He works in an organization where there is no provident fund/gratuity/pension, etc. Please suggest how much he should invest per month in a new pension scheme starting 1 April. Consider retirement age as 60 years. Would this be considered part of tax planning or beyond tax investment of Rs1 lakh per annum?
Savings are subject to many variable factors specific to individuals. It is best to define one’s own savings target. In the absence of future income and expenses, it would not be correct to work out the amount to be saved. However, generally speaking, I think investment as part of tax planning could be a good idea as it already takes care of 20% of your total income. Your son could start saving and hence investing more with a rise in income, or in case he is able to save substantially from his current income after making provision for medical expenses and other contingencies.
I have been investing in mutual funds from 2006 and so far have invested a substantial amount according to my income in different funds. However, it is observed that mutual fund houses take it for granted that the amount of investment received by them from investors are at their disposal without being answerable to any investor. This is from the fact that investors have not received any communication and no steps have been taken by them to safeguard our interest after the investment is made. While we agree that it is not possible for them to inform investors individually, they can still inform investors through newspapers about such schemes. Please suggest something in the interest of investors.
The last one year’s experience of investment is indeed very painful and quite a lot of investors have lost big chunk of their portfolio.
Regarding information on individual schemes, all updates are available on the fund manager’s website and most fund companies also have a periodic bulletin on their schemes. You may subscribe to them to remain in touch.
As far as investments in other options are concerned, I think fixed deposit rates have peaked out and there would be very attractive opportunities in fixed deposits in the long run. However, I agree that one should plan the portfolio taking into account the risk associated and should try to balance the risk by having fixed income bearing instruments in the portfolio.
I want to buy shares of Housing Development Finance Corp. Ltd (HDFC) for one year. What would be the impact of an initial public offering (IPO) of HDFC Standard Life Insurance Co. Ltd in 2010?
HDFC Ltd has fallen sharply in the last few days and it still does not seem to have bottomed out. My advice would be to look for better options or wait for better price to buy this stock.
Regarding the IPO of HDFC Standard Life, since there is not much information available on this, it would be difficult to comprehend the impact.
I have invested in the following systematic investment plans. I had been investing Rs30,000 per month since January 2008 and an additional Rs20,000 per month since December 2008.
Obviously, the returns have been in the negative but I have a four-five years time span and require your expert view on the following: 1. Will the schemes chosen by me yield good returns in the future? 2. Do I need to switch to some other schemes or rejig the allocation between equity, balanced and monthly income plan (MIP)? 3. Are MIP schemes good in the long run? 4. I have opted only for the growth option. Is it the sensible way of doing things?
My portfolio is given below.
1. Tata Balanced Fund Growth—Rs5,000, January 2008
2. Reliance Natural Resources Fund (G)—Rs5,000, April 2008
3. Reliance Diversified Power Sector Retail (G)—Rs5,000, February 2008
4. LIC MG Floater MIP Fund Plan—Rs3,000, January 2008
5. DSP BlackRock T.I.G.E.R. Reg (G)—Rs5,000, January 2008
6. HSBC MIP Savings Plan (G)—Rs3,000, January 2008
7. Principal Monthly Income Plan MIP Plus-Growth Accumulation Plan—Rs4,000, January 2008
8. Kotak 30 (G)—Rs5,000, December 2008
9. HDFC Top 200 Fund (G)— Rs5,000, December 2008
10. Reliance Regular Savings Fund (G)—Rs5,000, December 2008
11. Sundaram BNP Paribas Select Focus Reg (G) Appreciation— Rs5,000, December 2008
I think your choice is good and does not need much modification except for the inclusion of a banking sector fund to your portfolio. I think the banking sector could outperform the market in the long term as a lot would happen in this sector. My choice for banking sector fund is for UTI Banking Sector Fund and Reliance Banking Retail Plan.
Regarding your questions about MIPs and investment in a growth plan, their place and prominence in the portfolio depends upon one’s need, requirement and risk profile.
Answers are based on a technical analysis of the markets and individual stocks. The views expressed on this page are not the newspaper’s opinion and are provided for information purposes by Vipul Verma. Readers are requested to do their own research before participating in the stock markets. Neither the paper nor the information provider will be responsible for any outcome based on information provided here.