I am 46 years old and own a flat in Mumbai. I have systematic investment plan (SIP) of Rs 2,000 each in ICICI Infra Growth, DSP Top 100, HDFC Top 200, Reliance Growth and Sundaram Select Growth. I have invested lump sums of Rs 47,000 in Reliance Regular Saving Growth Fund and Rs 82,000 in Tata P/E Growth Fund. I pay Rs 50,000 annual premium for a unit-linked insurance plan (Ulip) since 2009 for a cover of Rs 20 lakh. I also pay Rs 15,500 annual premium for a life insurance policy for my daughter for a Rs 2 lakh cover. I pay Rs 17,000 annual premium for traditional policies. I pay Rs 11,000 annual premium for a family floater policy of Rs 6 lakh and accident disablement cover of Rs 10 lakh. I have been contributing Rs 70,000 in Public Provident Fund (PPF) since the last five years. The PPF amount stands at Rs 7 lakh and my savings in Employees’ Provident Fund is Rs 1.5 lakh. I have Rs 2 lakh in liquid fund and a fixed deposit of Rs 1 lakh. I want to build a corpus for my daughter’s education and marriage. I want to accumulate Rs 25 lakh for retirement. Are my investments on track?
You have the potential to save and you are doing that. However, the investment options you have chosen need to be realigned. Starting with your insurance, you need to evaluate the charges which you are paying on this policy as you would have paid premiums for three years, you can also check the value of the policy as well as the surrender value—both the values may differ as many times policies carry surrender charges till five years or even more. This should be seen along with the charges of the policy as well as its overall performance. Similarly, you need to evaluate the policy in your daughter’s name.
You do not have adequate cover. You need to have a pure term cover of about five times of your income. However, this is a policy where you don’t receive any return of money as this works only on the concept of mortality charge. Your medical insurance appears to be in order as well as your contribution in PPF and investment in liquid funds.
You are investing Rs 2,000 each in five funds. The amount appears too small considering your other investments. The selection of MFs also needs to be tweaked. You need to stop ICICI Infrastructure, Reliance Growth and Sundaram Select Growth. If you have additional funds, then you can consider increasing your SIP amount in other existing funds and also consider investing in diversified, mid-cap and balanced funds. Consider HDFC Equity, Canara Robeco Equity Diversified from the diversified category; IDFC Premier Equity, HDFC Mid-Cap Opportunities Fund from the mid-cap space; and HDFC Balanced and Birla Sun Life 95 fund from the balanced funds category.
Surya Bhatia is Certified financial planner and principal consultant, Asset Managers
Queries and views at email@example.com