8 Most Important Mutual Fund Questions

by Hemant Beniwal on May 6, 2011

Mutual Fund is a new baby for most of Indians – I keep getting lots of mutual fund question through Comments on post, Ask Us or Business Bhaskar newspaper where I regularly write query section. I have selected most important & most frequently asked questions (faq) out of that. You can also ask questions in the comment section.

Mutual Fund Question 278x300 8 Most Important Mutual Fund QuestionsMutual Fund Questions

  • Is a mutual fund with low NAV better?
  • Difference in performance of a Dividend or Growth Plan?
  • What are the tax benefits in mutual funds?
  • What are the charges in mutual funds?
  • Is it a good time to invest in mutual funds?
  • Should I invest in Infrastructure funds?
  • Equity Vs Real Estate – which one is better?
  • Mutual Funds or Direct Equity – who is the winner?

Low NAV Vs High NAV Mutual Funds

Question: Is it worth to go for a SIP in a fund where the NAV price is very high. Say HDFC Equity where NAV is around Rs 200?

Answer: You should not consider NAV as a deciding factor while investing in Mutual Funds. It is a myth that it’s good to invest in Mutual Fund with a low NAV because you will get more units and that means more returns. Let me clarify high or low has nothing to do with the future performance of the fund – NAV keep changing due to performance of the fund and that depends on markets & fund manager performance.

Only good thing with higher NAV fund is that it is having some past track record to show. Low NAV is a gimmick used by agents to introduce you to new funds where their commission is higher. Say NO to NFO.

Check calculation of high and low NAV mutual fund

High Vs Low NAV Mutual Funds 8 Most Important Mutual Fund QuestionsDividend or Growth

Question: I want to invest in Reliance Mutual Fund, but as I am seeing the NAV, there is huge gap in Growth and Dividend NAV. Which is better to invest?

Answer: Most mutual fund schemes come in three options – dividend, dividend reinvestment and growth. Under growth option, you get the units at the time of buying and you have same number of units till the end. The NAV keeps changing according to performance. The fact that under the dividend option the fund keeps on declaring regular dividends so NAV reduces with such dividends. In dividend reinvestment you get additional units on ex-dividend NAV. However, the truth is that it does not make a dime of difference which option you choose, from the pure investment yield point of view. There is a caveat, though – Investors should opt for that option that minimizes their tax liability.

Let’s take an example to understand this. Suppose an investor decides to invest INR 1000 in both, Dividend Re-invest and Growth option of the fund.

Check the calculation of dividend & growth plans.

Growth Vs Dividiend Mutual Fund Plan 8 Most Important Mutual Fund QuestionsTax benefits in Mutual Funds

Question: What are the tax benefits I can get while investing through mutual funds? Are there any special funds where I can invest to avail tax benefits?

Answer: Tax benefits on Mutual Funds keep changing time to time. According to current laws few of the tax benefits are: No long term gain tax on sell of equity mutual fund(long term here means 1 year plus), Tax free dividend, No dividend distribution tax in case of equity mutual fund, Benefit of indexation in case of debt mutual fund & Lower long term gain tax in comparison to any other interest bearing product. You can also invest in Equity Linked Tax Saving Schemes of mutual fund to take benefit under section 80 C. ELSS schemes have lockin period of 3 years & as the name suggest it invest in equity shares.

Mutual Fund Charges

Question: How the mutual fund charges their annual maintenance fee from the investor? Does it reflect in the NAV we get against the amount investor pays? How can an investor calculate it from the statement it receives? Other than this any other charges?

Mutual Fund Expenses 300x106 8 Most Important Mutual Fund QuestionsAnswer: You are lucky that you are asking me this question in No Entry Load era so there are only annual charges that you have to pay. Mutual Funds deduct Annual Maintenance Charges from the fund that you are investing. Charges depend on the type of fund & size of fund you are investing into. Charges are higher in case of equity funds if compared to debt funds – if size of the fund is big charges are comparatively low. Charges are levied in guidance of SEBI & maximum charges that are allowed in case of Equity fund are 2.5% & in case of debt are 2.25% in a year. These charges are used for asset management, distribution cost, custodian charge, registrar charge etc. These charges are automatically deducted from your NAV on daily basis. So the NAV you see is after adjusting these charges. It can’t be calculated through statement but you can check these expenses in monthly factsheet.

Good time to invest in Mutual Funds

Question: I would like to invest Rs 2 Lakh for Long Term. Will you suggest investing it right now or should I wait for correction.

Answer: Far more money has been lost by investors in preparing for corrections, or anticipating corrections, than has been lost in the corrections themselves. You should understand that timing of market is not possible even by experts. In long term equity has consistently outperformed all other asset classes and works well against rising inflation. Equities are volatile in short run but have the potential to create immense and stable wealth in long run. In last 30 years, if one has invested for any 20 year period, the worst returns are 13.35% which is double of what you get in a Endowment policy & average return of equity in same period is 16.72% which is double than any other debt investment. But if you don’t feel that you have such patience better invest through 1 year Systematic Transfer Plan.

One more on timing the market

Question: I was running a SIP of Reliance Vision for Rs. 1500/- per month it ended in the last September…I invested Rs. 36000/-in 2 years… the present value is Rs. 49,000/-. It touched Rs. 54,000/- a few months back also but I didn’t withdraw the money. But now as the markets are going down, I think I have taken a wrong move by not taking the money out.
Answer: Equity gives you two type of return, one is speculative and another is fundamental growth. 95% of the investors in shares or mutual fund are here for speculative gain that is gain from the short term price movement. They start TIMING THE MARKET rather giving TIME IN THE MARKET. This approach for short term gains is the real cause of loss. Investment for long run is not only rewarding but also beats inflation by a good margin and creates wealth. If you keep such a close track on your investment it is going to be very tough for you to achieve your goals through equity investment.

infrastructure fund 8 Most Important Mutual Fund QuestionsInfrastructure Funds

Question: Should I invest in Infrastructure Funds – as it is believed that India needs good infrastructure & that will be reflected in performance of the stocks.

Answer: Infrastructure as a theme was started in 2003-04 at that time exposure of infrastructure based sector was not more than 25% in diversified equity funds. But now compare portfolio of diversified equity fund with any infrastructure funds and you will find that exposure in infrastructure related stocks has gone up to 60-70% of overall portfolio. So now investing in infra funds means increasing risk of your mutual fund portfolio. Infrastructure covers lot of things like banking, power, energy, engineering, construction, cement, metal etc. One more thing people need to realize that any diversified equity fund can buy into any sector or theme if fund manager sees potential. Buying theme funds should be decided only when the theme has something unique to offer, which other funds are either not offering or offering in a limited way.

Equity Vs Real Estate

Question: Which will give better returns in long term – equity or real estate?

Answer: Both equity & real estate are growth asset class and will always beat inflation in long term by substantial margin. Both real estate & equity market are driven by growth of the economy & businesses. In long term equities give better return than real estate but investors have earned better returns in real estate. Reason is in real estate people invest for long term may be 10-20 years so it saves there undue expenses, tax & bring out greed & fear emotions from investment. But in equity we do it other way & that’s the reason investor feel properties give better return. Also remember their are many short comings with real estate as well like size of investment, leveraging, black money, title problem, encroachment, liquidity issue, maintenance charges etc.

Mutual Funds Vs Direct Equity

Question: I want to invest 2 lakh in share market for 10 year please suggest me best shares in infra, power, bank, FMCG?

Answer: There is one good thing & one bad thing about your question. Good thing is you want to invest for long term in equity but bad thing is you want to invest directly in equity rather than going through Mutual Fund Route. The biggest problem with direct equity is that a very small number of people can do it right. And people who can do it right don’t ask for suggestions or tips – they just research & make their investments. But most of the people just feel they’re right, till they get really screwed big time when market makes a turn. I am having a big confusion that why people think they can beat mutual fund managers? Direct equity demands too much attention & at times it’s too addictive. And when you can’t control yourself, it can ruin your portfolio and wipe out your savings.

Hope you learned something out of this post. In case if you have any mutual fund question – feel free to add it in comment section.

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{ 314 comments… read them below or add one }

1 Gaurav Jain

Hi Hemant,

Thanks for such a nice article. I have shared this with all my close friends.

My query is, I have purchased a sip in RELIANCE EQUITY OPPURTUNITIES FUND 2000 pm….. kindly tell me abt this fund and how it will be in future….

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2 Hemant Beniwal

Thanks Gaurav for sharing the article.

Regarding your question – Reliance Equity Opportunities is a diversified equity fund with multi-cap focus. Multicap means fund is not biased toward large cap or mid cap – but it is free to invest in any type of stocks. These are bit aggressive funds as fund manager talks calls depending on the future market outlook. This fund has given good returns in last 3 year & substantially higher than it’s peers. You can continue your investment in this fund but if you are thinking about further investment you should choose 1 large cap & other mid cap fund.

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3 Girish B

Hi Hemant

Thanks for taking time to share the valuable information.

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4 Rohan Doshi

Hi Hemant ,

If i have SIP portfolio of 4-5 mutual funds which have very good track record ,then my queries are
1. How frequent should i review my portfolio
2. what should be avg annual return that i should expect from fund of each category , like largecap , midcap , multicap , secotrial
3. If after 1-2 years, in a review i find out that one of the fund is not performing upto the average (not sure which average should set as base ) , then should i switch to other fund from same sector or should i wait for it to perform
All the funds are from very good fund houses and have decent record in past

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5 Hemant Beniwal

Hi Rohan,

It’s good to see that lot of people are taking interest in SIPs & asking questions regarding the same. Regarding your 1st query – you can review your portfolio on quarterly or half yearly basis but if you are following asset allocation you should try to rebalance it not before 6 months. Telling average return in future depends on many thing so quoting exact figures is like gazing crystal ball which is not possible but still you can expect 12-15% cagr returns from equity mutual funds if you horizon is 10 years. Mid caps can deliver bit better returns than large caps but also have some extra risk. If one of the funds is not performing for 2-3 years you should check the reason why this is happening – is there a change in fund management team, there thought process, any changes in overall objective, what about other funds in the same category. Also see what was the reason that you bought that particular fund – once you have done all this take a well thought decision.

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6 Balraj

My mutual fund agent is absconding from last 1 year. So I contacted some other agent through reference of my friend but he tried to sell me ulips. Can you please help how can I switch my funds & start new sips.

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7 Hemant Beniwal

Hi Balraj,

Simple reason is there is no entry load on mutual funds – means less earnings for mutual fund advisors.

You can directly reach asset management company.

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8 Ramesh

Most funds charge an exit load if units are redeemed before a specific period. Is this exit loads also applicable if we withdraw the dividends reinvested from the same scheme before this period?

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9 Hemant Beniwal

Hi Ramesh,

Yes it will be applies as dividend reinvest is considered as a purchase. (so exit load & taxation will be done as a new purchase)

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10 Tanmay

Hi

I want to understand in todays scenario if the investors horizon is for 2 years which would benefit him more an investment in MIP or investment in GOLD Savings Fund.

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11 Hemant Beniwal

Hi Tanmay,

This is a dream question that people ask me daily – which is the asset class that will perform best in near future? And I only have one answer I can’t predict it. :(

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12 Gaurav

I am 33 years old and had invest in lot of LIC and also in ULIP plan of State bank of india and now I wants to start SIP of around 5000 to 1000o per month please advice should i go for one SIP or invest in different SIP

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13 Hemant Beniwal

Hi Gaurav,

As I have already mentioned to few readers that people should have proper diversified portfolio same applies to you.

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14 Vijay

Hi Hemant,

Can you please provide me the details of upcoming FMP’s for period of 1yr. i like to invest in FMP’s .which FMP is best?

Thanks

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15 Hemant Beniwal

Hi Vijay,

We don’t keep list of this – you should contact your mutual fund advisor.

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16 D J Trivedi

Dear Hemant,

I am a regular investor in Birla Sun Life tax relief 96 growth fund and invest monthly Rs 10000 since last one and half years. Now my question is , how it this mutual fund doing? Should I hold it for long ie say 2 more years or should I look for some other mutual funds with better returns. Is it advisable to continue for long? Can you please advise. Also which are the best funds with long term planning say for 5-10 years.

Can you also give me your opinion on Benchmark S&P CNX 500 Fund – Growth Plan as I am also having a monthly SIP ( Rs 2500 ). Is it ok for long term investment with this mutual fund.

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17 Hemant Beniwal

Hi Mr Trivedi,

Birla tax relief is OK kind of fund – even it would have been best performing fund – still I would have suggested you that you don’t have a proper portfolio.

My suggestion is you should divide this amount in 3-4 funds – you can add HDFC tax saver or fidelity tax saver.

Benchmark S&P CNX 500 Fund is an index fund & that too a very diversified index – may be bit less risky but I don’t expect it outperforming managed funds.

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18 shripad kulkarni

This is indeed a very helpful portal to access great information on financial planning. I am planning to get into SIP with HDFC for the following 2 finds
1) HDFC top 200
2) HDFC Prudence Fund

I am planning a SIP of 1000 and 3000 INR respectively initially, this is apart from my other financial savings.
I have read the fund performance reports of the 2 funds, given the knowledge you possess could you please tell me if its worthy the effort ?

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19 Hemant Beniwal

Hi Shripad,

Both funds are good but I will suggest you to divide your funds in 2 mutual fund companies – you can also invest in fidelity equity fund.

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20 Sumeet Gupta

Hi Hemant,

I agree that both the HDFC funds – Prudence and Top 200 (and even Equity) are managed by the same manager. But if the funds are the best performing funds in their respective categories, does it not make sense to continue with them rather than get a relatively low-performer from the same category? All these funds from HDFC have been very consistent in their performance and i see no reason that they won’t continue to do so. Your thoughts please!

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21 ANIL KUMAR KAPILA

Hi Sumeet
Recently I had shortlisted some top performing funds of different categories.I found that there are some fund houses which have around four high performing funds.Under the circumstances one is tempted to have more than one fund from the same fund house in the portfolio.But the advisers generally do not favour having more funds from the same fund house.

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22 Sumeet Gupta

I agree Anil that advisers do not favor having funds from the same fund house in the portfolio. But that’s exactly my question. As an example, if HDFC Prudence is the best performing fund in the balanced category, should one avoid it simply because one already has HDFC Top 200 or HDFC Equity?So do i diversify at the cost of reducing returns?I think it is not easy to answer that.

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23 ANIL KUMAR KAPILA

Hi Sumeet
There is so much of difference of opinion among the advisers as for as investment in mutual funds is concerned that it leaves the investors confused.To give you an example recently I read the opinion of two advisers in two different magazines regarding investment in Reliance Growth Fund. One adviser was of the opinion that one should immediately come out of this fund in view of its deteriorating performance whereas other said that in view of its past history one should remain invested in this fund.
As for as HDFC Mutual Fund is concerned it has perhaps the highest number of highly performing schemes. I think there is no option for the investor but to take his own call in such situations.

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24 Siddharth

Hello sir, inspired by your site, started gaining knowledge abt mutual funds and willing to invest in equity funds. Ihave 2 goals right now, 1st is to accumulate 5 to 6 lacs inperiod of 5 yrs from now. 2nd goal is to accumulate 15 lacs in 10 yrs. Please suggest funds and the strategy. Whether to go for large cap, mid small cap or multi cap? Why mid and small cap funds offer high returns as compared to large cap? I learned abt diversification and it suggests me(citing example) not to include HDFC top 200 and HDFC equity in one portfolio bcoz their stocks are very similar. Am i right?

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25 Hemant Beniwal

Hi Siddharth,

Great Going :)

Regarding your question – Why mid and small cap funds offer high returns as compared to large cap?

Small companies have more scope for growth – as we can’t expect reliance to double it’s profit every year but some small companies can do it – in long term this reflects in stock prices.

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26 Arun

Hemant – Wonderful article and very well articulated.

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27 Hemant Beniwal

Thanks Arun for appreciating our effort. :)

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28 Siddharth

Thanks for clearing that concept! Sir, It would be great if you suggest some funds and diversifying strategy regarding my two goals, i mentioned!

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29 ANURANJAN MISHRA

Dear Hemant

Hemant-Great article .Please let me know the fair comparison between ulips of INDIAFIRSTLIFE INSURACE COMPANY LTD and mutual fund,expecially mutual fund..
Thanks Hemant once again for such a nice post.

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30 ANIL KUMAR KAPILA

I know it is impossible to time the market.Last year when the sensex was around 20500 I made lumpsum investments in HDFC Equity Fund,HDFC Top 200 Fund,Birla Sunlife Frontline Equity Fund and UTI Opportunities Fund.My returns from these funds are still negative.On the other hand I am getting decent returns from my investments in Kotak Mutual Fund and ICICI Prrudential Fund where I am investing through monthly SIPs for the last three years.The lesson which I have learnt is that long term monthly SIPs even in average funds are much better than lumpsum investments even in the best performing funds.

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31 Rakesh

Hemant,

Great article, cleared some doubts that I had on MF.
Keep up the good work.

Rakesh

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32 RAJESH

Thanx.

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33 Mahesh Godbole

Respected Sir,

I am investing in SIPs as follows.
1.Reliance Gold Saving Fund – Rs.500/-per month
2.ICICI Prudencial Focused Bluechip Equity Fund – Re.Growth – Rs.1000/-per month
3.HDFC Equity fund – Growth – Rs.1000/- per month. Are these good funds for me? I want to invest some more funds. Please suggest me some good funds to invest. Thank you.

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34 ANIL KUMAR KAPILA

Dear Mahesh
Your selection of funds is good.For additional investment select the large cap funds from the list of funds for SIP given by Hemant.

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35 Velu

Thank you Hemant for this wonderful article. It was absolutely great. The answer for the last question Mutual Funds Vs Direct Equity was too good. And you said it truly , investing in equity becomes addictive. it is better to invest in good MF for a long term .

Thank again for a wonderful article.

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36 Hemant Beniwal

Welcome Velu

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37 Prakash S

Dear sir,
really great article for young generation investors. Could you throw some light on sectoral funds like pharma, banking. Are these too risky to invest? How to go about them? Please suggest!

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38 Hemant Beniwal
39 chandrani

hello sir,
my husband is investing Rs.25000p.m. in 5-6 funds like HDFC top200, BSL frontline, DSPBR top100, Reliance growth, HDFC midcap opp. for last 2 yrs. through SIP. my husband is saying that he will redeem these funds when sensex will touch 21000 mark or more as the NAVs will be higher and keep on investing through sips. may be it will take 3 yrs or 5 yrs or 1 yr. and put that redeemed money in either any debt fund like PO mis or FDs or STP. but i want to stay invested for 10-12 yrs. and when i’ll need that money i’ll redeem it to achieve our goal. so i’m confused whether to listen to him or try to convince him. please suggest!

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40 ANIL KUMAR KAPILA

Hi Chandrani
It does not appear to me that sensex is going to touch 21000 in near future.This is blessing in disguise for you and will allow your husband to remain invested in these good funds for a longer period of time.

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41 M Ali

I wanted to have a very straight and profeesional opinion about investing in Sundram Equity Plus NFO. I understand that it is advisable to invest in NFOs but sundaram is a good fund house and have a standing in the market. Your Opinion please to invest or not?

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42 Hemant Beniwal

Hi Ali,

Who told you that it is advisable to invest in NFOs? I think this should be your agent who gets more commission when you invest in NFOs. NFO is the worst way to participate in Mutual Funds you don’t know about the track record of fund & NFOs with new themes are launched when there is fancy in the market. If you are investing from couple of years you should know what happened to IT funds that came in 2000 or Infra related funds that arrived in 2007. So in case of Sundaram Equity Plus they are trying to push gold which is fancy now a day. My suggestion is you should not invest in it & if you want to buy gold you can directly go for gold ETF or Gold Mutual Funds.

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43 Vinod

Hello Hemant Ji,

I’ve browsed through all of your articles & other sites but haven’t found out how tax is calculated on Mutual Fund returns.
I’ve just started to invest in Mutual Funds through SIP. My fund are :-

ICICI Focused Bluechip Eqty. – 5,000/-
ICICI Discovery Fund – 3,000/-
ICICI Dynamic Plan – 3,000/-
HDFC Equity – 5,000/-

I’d like to invest for long time (for atleast 10 years).

So how my tax is going to be calculated. Is it going to calculated yearly or when I stop the SIPs or how?

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44 Hemant Beniwal

Hi Vinod,

Before answering your question let me tell you that are you very big fan of ICICI Mutual Fund? Almost 70% of your money is going in a single fund house which makes your portfolio very risky. I think either you are dealing ICICI Bank/direct for investments or your agent is having some special interest in ICICI SIPs. Check what’s the case because it will definitely going to have big impact on your investment planning. Now coming to your question as you said you are going to invest for 10 years & will redeem after that. In mutual fund tax is applied when you redeem that amount & if it equity fund & redeemed after 1 years the whole gain is tax free. So in your case investment done in first 9 years will qualify for long term capital gain but the investments done in 10th year will come under short term capital gain & you have to pay 15% on the gains. My answer is according to current tax laws but they can change after DTC.

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45 Mayank Gupta

Mutual funds give 18% returns conservatively if I consider a 5 year or 10 year view

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46 Hemant Beniwal

Myth or mis-selling :(

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47 Amit Kumar Gupta

Hi Sir,
I have taken below 4 SIPs
1. HDFC TOP 200 — 2000 Rs per month
2. Fidelity Equity — 2000 Rs per month
3. DSP Small & Mid Cap — 1000 Rs Per month
4. Reliance Gold Saving — 1000 Rs per month

Could you please suggest me if my portfolio is equally diversified.

Thanks,
Amit Kumar Gupta

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48 Hemant Beniwal

Hi Amit,

It’s a good portfolio – keep holding.

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49 ANIL KUMAR KAPILA

I had left a comment earlier which seems to have been lost.My question is regarding rating of Mutual Fund Houses and Equity Mutual Funds.Recently many personal finance magazines have given ratings to fund houses as well as equity schemes.However the ratings given by different sources are different.This is mainly because no common yardstick is used in rating.Each source uses a different methodology of ratings.Hence I would request you to write an article on the methodology to be used by the investors before investing to arrive at the correct combination of the fund house and the equity scheme.

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50 Hemant Beniwal

Hi Anil,

This is really a tough one – different type of ratings from different sources are creating a big time confusion in investor’s mind. Some are using quantitative techniques other are using qualitative. Some are using different time horizons – so one is talking about 3 years other is talking about 5 years. Even in qualitative criteria are different someone giving preference to alpha & sharp ratio and some others are talking about sortino. To add confusion asset management companies are promoting it where they are leading. I think even I am increasing confusion by writing all this. I think there are 2 solutions for investors – one they should develop their own research which is easy to say but hard to do or two stick to one of the resource which you trust most.
I will try to write something on this.

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51 ANIL KUMAR KAPILA

Hi Hemant
Thanks for your response.I have observed that even the expert advisors have a herd mentality.Most of them restrict themselves to their favourite fund houses.Even the authors who write about funds and fund houses give higher ratings to their favourite funds and fund houses and adopt a strange methodology which the investors can not understand.The resources which I use for research are Value Research, Mint and OLM.I hope these are OK.

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52 ANIL KUMAR KAPILA

Hello Hemant
Today I got a mailer from HDFC Mutual Fund regarding Flex STP.It says that it automatically increases the amount of investment in a falling market and decreases it in rising market.Some time back I had read in a Personal Finance Magazine that a similar concept is available in the case of SIP also.The idea behind this concept is to increase the returns by decreasing the cost of investment.The concept looks good but how it actually works in practice is not clear to me.Can you please throw some light on it?

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53 Hemant Beniwal

Hi Anil,
These products are based on value averaging concept – which is a good concept & sometimes looks even better than rupee cost averaging(SIP). First value averaging is not used in best shape in India – value averaging says when market is going down add more amount & when market is going up there should be provision to redeem amount. Adding more units is available in many systems but no one talks about redeeming amount. Second in case of a sharp fall you need to add lot of money – say you are running a 4 thousand per month SIP & next month they may ask you to add Rs 15000 which is not practical for everyone. Value averaging is also not helpful in secular bull runs. So when we will see the calculations on paper it may look amazing but I think SIP with combination of asset allocation will be a better option.

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54 ANIL KUMAR KAPILA

Hi Hemant
Thanks for your response.Recently I read cover story of a leading Wealth Creation Magazine about SIPs.So far I had believed that one should invest 70 to 80 % of the investment in SIPs in Large and Midcap Funds.But in this article the author gives the breakup as 40 % in Large Cap Funds, 20 % in Flexi Cap funds, 20 % in Mid Cap Funds, 10 % in Value style Funds and 10 % in Infrastructure Funds.This has left me totally confused. I would like to have your take on it.

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55 Mihir Vora

Dear Hemant,

I have started with 3 SIP’s with Rs 1000/-

Birla sunlife tax relief 96
Fidelity tax advantage
Reliance gold saving fund

Please tell me whether my portfolio has good fund.
Can you please suggest me which fund should i invest now i have two fund name but m confuse:
Reliance tax saver
Fidelity india growth fund

i will be investing it via SIP with Rs 1000\- and it will be long term…

Please assists me need ur help on this…

Regards
Mihir Vora

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56 Hemant Beniwal

Hi Mihir,
It’s good that you have a diversified portfolio & you are investing in it through SIPs. And for tax planning you are investing in ELSS funds – more or less everything looks fine. But your confusion has confused me. Why you are comparing an ELSS fund with a normal diversified equity fund – both have different investment purpose. My suggestion is if you want to add new fund for tax saving purpose go for HDFC Tax Saver otherwise you can choose between DSP Top 100 and HDFC Top 200 Fund.

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57 ANIL KUMAR KAPILA

Hi Mihir
You seem to have special fascination for tax saving funds.Long term investment in equity funds is for wealth creation and not tax saving.For long term equity mutual fund investment select large cap funds from the list of funds given by Hemant for SIP.

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58 Sangeeta

Hello Hemant ji,
I have a doubt regarding MFs, I took an ICICI pru blue chip through SIP( 5000) monthly . I have an account in hdfc bank .Last month the money deducted from my saving . I can see the mf in my bank detail. But this months what i noticed that the money ( 5000) which should go to ICICI pru , but has deposited back to my account, that means this month , i have not given any money to this sip. When I asked my bank cs , she told that you must inquire with ICICI bank. I called the ICICI bank cs , she is saying that I have not any account in this bank, and since I took this sip through hdfc bank so I need to put my question there. I am really confused whether my money is going to ICICI prue through sip or not , if it is going then why they returned back this month installment .please help.

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59 ANIL KUMAR KAPILA

Hi Sangeeta
Sometimes after starting the SIP, fund house detects some problem in your SIP application or payment mode and reject the SIP.I think you should visit the office of your fund house ICICI Prudential Mutual Fund or the registrars CAMS to find out the problem with your SIP application and make the necessary correction or give a new SIP application to resume the SIP.Banks can not help you in this matter as they are responsible only for making the payments to the fund house from your account as per the mandate given by you.

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60 sangeeta

Thanks Kapil for prompt reply, I will definitely do that , thanks again.

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61 ANIL KUMAR KAPILA

Hi Hemant
While considering investment in mutual funds we frequently come across the term diversification.However there seems to be no clarity on this aspect of investing.For some diversification means selection of different fund houses.For others it means investing in different types of funds.For some investing in three or four funds is enough for diversification.For others eight to ten funds are required for proper diversification.Terms under and over diversification are also frequently used.Can you please throw some light on this aspect of investment in mutual funds.

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62 NARESH DESAI

DEAR SIR,

CAN YOU PL. PROVIDE ME THE NAMES OF SOME MUTUAL FUND SCHEMS WHICH INVESTS IN PRECIOUS METALS ( DOMESTIC & OVERSEAS) , I HAVE ERAD SOMETIME BACK ABT.ONE SUCH SCHEME BUT NAME I DO NOT REMEMBER NOW.

Regards

Naresh Desai
982
Valsad

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63 Hemant Beniwal

Hi Naresh,
Never leave your number on public forums.
There are few funds that invest in international precious metal companies like – DSPBR world Gold, AIG World Gold & Birla – global precious metals.

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64 pramod

Hi,
I have invested inNFO of following funds:-
1. religare business leaders fund-5000/-
2. religare PSU fund–10000/-
3. reliance gold saving fund–5000/-
am planing to invest in SIP of reliance gold saving fundplease advise me its good or not and also advise how i can switch from one fund to another in same family.

Reply

65 Hemant Beniwal

Hi Pramod,
Before switching anything switch your Mr Financial Advisor & if you want to say it was your decision to invest in these funds – my suggestion is start learning basics of investing. If we talk about your existing portfolio you already have a 25% exposure in gold so there is no need to add SIP in this fund. You have one thematic fund Religare PSU – such funds should only be part of once portfolio if you already have a strong portfolio with core funds. You have another large cap fund from Religare but again it is a poor performer. My suggestion will be replace these Religare funds with HDFC Top 200 & Fidelity Equity Funds and also start your planned SIP in them. Keep holding Reliance Gold savings fund but don’t increase your exposure in it.

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66 Vijendra Singh

Hi Admin,

Request you to kindly review the below SIPs of mine and provide your feedback/suggestions.

Policies Amount SIP Mode
Franklin India Bluechip, 2000 Monthly
BSL dividend yield, 1000 Monthly
BSL frontline equity, 1000 Monthly
HDFC Tax Saver, 2000 Monthly
HDFC Equity-Growth, 1000 Monthly
HDFC TOP 200, 1000 Monthly

Thanks,
Vijendra Singh
Age: 27 Years
Mumbai

Reply

67 ANIL KUMAR KAPILA

Hi Vijendra
Your portfolio has already been reviewed.

Reply

68 Vijay

Hi Hemant,
I had some time with 1 of Agent from Aegon Religare, i asked which is best Ulips or Mutual funds, suddenly he started explaining that MF’s are not good at this time and 1 should not go for that…and said Ulips are good at moment from there company, explained the schemes which have higher premium’s yrly, i know why he is telling abt high premium schemes bcoz he get good commission from that till the policy exists. he also explained abt the Money back and Pension schemes…. but the point i like to tell is……….we should have minimum knowledge before meeting agents…if nt they simply make fools……….

i have taken term insurance from Aegon he started telling me big stories……..but i did not fall under this trap………..that for giving me some knowledge Hemant..i had full debate with him asked many Q, but he could not answered. bcoz he has to make money for him……………

Thanks Hemant……………for giving me knowledge on investments………….
1. SBI tax gain SIP 1000/- 10yrs
2. HDFC Equity SIP 1000/- 10yrs
3. HDFC TopFund SIP 1000/- 10yrs
4. PPF Monthly 2000/- 15yrs
5. Savings account monthly 2000/- life time
6. LIC for my wife yrly 9600/- 20yrs
7. Term insurance 20yrs 20lacs, with riders ADD/Ci each 5lacs—total 7500 pa.

please go thro my portfolio and suggest me on this ,

Thanks Hemant

Reply

69 M Ali

What do you advice for a peron of 55 years of age with practically financilly sound and want to invest an amount (30,000) in mutual funds for a period of 5-8 years. My main concern is is it advisable to invest in equity mutual funds at this age.

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70 ANIL KUMAR KAPILA

Hi M Ali
If a person is in sound health there is no issue in investing in equity mutual funds at 55 years of age.

Reply

71 Ali, M

Thanks!

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72 Prakash V Kumar

Hi, Hemant.
Following are my monthly investments:
HDFC Top 200 (G)- Rs 3500.00 per month SIP
HDFC Equity(G) – Rs. 3000.00 per month SIP
Reliance Banking Fund (G) – Rs.3000.00 SIP
Reliance Growth fund(G) – Rs 1500.00 SIP
Reliance Regula saving fund(G) – Rs. 3000.00 SIP
HSBC Equity fund (G) – Rs. 1000.00 SIP
ICICI Prudential Life Time – Rs 1500.00 per month
PPF – 25000.00 per month

I have been investing in SIPs for last 4 to 5 years.Fund selection is entirely on experience gained by online briefs or books. Donno the direction of my investment.I have a life cover of 35 lakhs taken care of.Request you to kindly review my investment and provide your feedback/suggestions.
Thanx

Reply

73 Hemant Beniwal

Hi Prakash,
PPF Rs 25000 or Rs 2500
Will suggest you to hire some financial advisor in your area.

Reply

74 Prakash V Kumar

Its 25000.00 in DSOP ie Defence services provident fund. Do i need to relocate some funds and are my SIP funds worth investing….

Reply

75 Hemant Beniwal

Hi Prakash,
I have written something special for defense personnel – hope you will like it
http://www.tflguide.com/2010/12/financial-planning-for-defense-personnel.html

Reply

76 Amit

Dear Hemantji! Thanks for all the efforts. I have a few queries. It would be nice if you can throw some light.

Recently started two Rs.1000 SIPs in HDFC Top 200 & HDFC Equity. Just went through all the comments, & understood they both are almost identical. Hope to discontinue any one. Which one would you suggest?

Also I went directly to the HDFC AMC office & inquired about DIRECT investment. The Representative there said I could invest either DIRECT or through an Agent. The She introduced me to an Agent sitting there & said that he will not charge anything from me. So I agreed. He filled ARN No. in the form. My query is what is the Agent’s interest in all this. I know he gets some trail commission from AMC, which would be pocketed by the AMC itself if done DIRECT. Does he have any other interest? Actually I want to know if I invest direct, would it be more beneficial to me or it will be same?

Other two things I want to know is about Parking Surplus Funds & Flexibility options in SIP Installments. I have Rs. 1 lac in Surplus in SB A/C which is earning 4%. Where should I invest this Surplus – in some Liquid or Debt Fund from where it can be credited to the SIP A/C. For this to happen does both Liquid Fund & SIP should be with same AMC. Kindly suggest a few Funds too in this regard & also what would be Tax implication in case of this type of STP.

Sorry for the long post. Thanks & keep educating.

Reply

77 ANIL KUMAR KAPILA

Hi Amit
Both HDFC TOP 200 and HDFC Equity are good funds.HDFC Top 200 is large and Midcap and HDFC Equity is multicap.Which one to have depends on other funds in the portfolio.
It does not matter whether you invest directly or through an agent so long as you are not paying anything extra.
For suggesting funds for your portfolio it is advisable to take the services of a financial planner.

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78 N.M.R.Shreedhar

Reg which option is better — Dividend payout, re-invest or growth–if investment tenure less than 2years ,maybe Payout better — the dividend amount you can put in some fixed income investment like PPF. With Div re-invest and growth options, there is a chance that if NAV is down at the moment you want to encash, you might get less. However, if investment tenure more than 2yrs, growth option best, I think. Your views please.
regds

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79 ANIL KUMAR KAPILA

Hi Shreedhar
Investment in equity mutual funds is done to meet the long term goals.Hence the horizon of investment is minimum of five years.For this purpose growth option is the best.Investment of less than two years comes under short term. For the short term investment in equity mutual funds is not desirable as it is very risky.

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80 ruta

Hi..
Can you tell me whether its better to invest in MF in lump sum amount or through SIPs?

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81 NAERSH

IT IS ALWAYS BETTER TO INVEST VIA SIP ROUTE SINCE IT HELPS INAVERAGING
BUT COMBINATION OF BOTH SIP & LUMPSUM WILL ALSO YIELD BETTER RETURNS SINCE LUMPSUM CAN EB INVESTED IN EITHER MIP OR DEBT FUNDS & SIP TO BE INVESTED IN DIVERSIFIED EUITY FUNDS . THIS WILL HELP IN MITIGATING RISK ALSO.

HEMANT IS IT CORRECT ?

Reply

82 ANIL KUMAR KAPILA

Hi Ruta
SIP is the best route for investment in mutual funds to meet your long term goals.The greatest advantage is that once you start a SIP you can remain invested for a long time without bothering about the short term ups and downs of the market.The greatest disadvantage of lump sum investment is that you become a hostage of market timing.While it will be foolish to invest lump sum when the sensex is at around 22000,it makes sense to invest at a level of around 17000.You can always invest some lump sum whenever there is a sharp correction in the market.Probably this is the best time to make some lump sum investment.

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83 Sangeeta

Hello,
I am here for some advises from expert here. I have some amount ( 80,000) which I got by cancelling fixed deposit as it was gaining only 7 %. I would like to have your views , where to invest this amount ? Should I invest it again in bank FDs as the interest rates are high or should I invest it in lump sum to MFs as the sensex is down now . ( NB: already have a rd of 2000/monthly in bank for 2 yrs and 4 lakhs in Kisaan vikas)

2. Also please guide me some MFs for lump sum investment.
I have chosen the below funds to invest through SIPs / lump sum .
a. HDFC top 200 equity ( 3000)
b. ICICI prudence focused blue chip( 3000)
c. DSP black rock mid cap (2000)
d. Birla sun life ( which one ??? confused)( 2000) I want to have a diversified portfolio as hubby has already lost 7 lakhs in intra day trading :(

I am thinking to invest for 10 to 13 yrs with expect ion of gaining 13 to 15 %

3. One more question , I am investing through MF distributor , do I need to pay any commission to him ? shall I directly invest through my bank or should I personally invest through each fund house . Why investing in MFs is so confusing?
My mfs distributor told me that Investing through distributor , is better idea as I do not need to pay any charge for fund management , is he true?
Please guide.
Looking forward to hear from the experts.
regards
Sangeeta

Reply

84 ANIL KUMAR KAPILA

Hi Sangeeta
Sorry to learn that your husband has lost so much in trading.I would like to inform you that investing in mutual funds is much better than trading but still subject to market risks.Before you start investing you must have some risk appetite.Normally you should expect a return of around 12%.The core of your portfolio should have large cap and large and midcap funds.Satellite of the portfolio can have multicap and mid and small cap funds.I think you mean Birla Sunlife Frontline Equity which is quite good.The funds you have selected are quite good.You can add one multicap fund if you want.
Once you have decided on the funds for your portfolio there is no need to invest through a distributor.You can always go to the offices of the concerned fund house and can get assistance from there in filling up application forms.

Reply

85 Hemant Beniwal

Hi Sangeeta,
Just read your message – sorry to hear that you people lost Rs 7 Lakh in trading.
Don’t feel offended by what I am going to write now – I don’t want to lose a good learner like you.
See at one place you have lost a big money & on another place you have a hitch to pay financial advisor. This is a very common approach by people & it is called “Penny wise – Pound Foolish”. A good financial advisor would have saved you these Rs 7 Lakh & many more – people need to understand this. Being financial literate never means that you don’t need to hire financial advisor. Hiring a right financial advisor is a time consuming process but may be one of the most important thing in your financial life.

One more thing few people think that finding few good performing funds is Nirvana but how you will control your behavior. Then they will say we are very patient about our investments – we are investing since 2005 & we never sell in fear. (even in 2008 when market was down more than 50%) And they are very sure that they will not do this in their lifetime – so my question is which one was your equation in 2008:
1. Your income was 10 Lakh & your equity portfolio size 5 Lakh. Or
2. Your income was 10 Lakh & your equity portfolio size was 1 Crore.
If your answer is 2nd you may not need investment advice from anyone. THINK

Reply

86 Sangeeta

Thanks much Hemant ji and Anil ji, for your prompt reply. Yes I am also thinking to hire a financial adviser , but again not able to choose a good and certified adviser who can advise neutrally. Also I have a small baby to take care so really cant go office to office for purchasing funds, so buying funds from distributor seems good idea for me if I will not have to pay him .

thanks again .

Reply

87 ANIL KUMAR KAPILA

You are welcome Sangeeta.

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88 Shradha

Dear Hemant,

I have been going through your posts and they have been most helpful. In 2006-2007 I got very much interested in investments and made a portfolio. Subsequently market crashed and then I got busy with work, and somehow I just didn’t keep up.

But now again I want to get into good investment options. Here is my portfolio

Investment Portfolio

S. No Fund name Investment year Fund Type
1 Rel Savings Equity Plan(G) 2006 lumpsum
2 HDFC Capital Builder (G) 2006 lumpsum
3 Franklin Templeton Prima 2006 lumpsum
4 ICICI Pru Infrastructure (G) 2006 lumpsum
5 ICICI Pru Dynamic (G) 2006-2008 in installments
6 ICICI Pru Dynamic (G) 2006-2008 in installments
7 Sundaram Mid Cap 2007 lumpsum
8 SBI Magnum Global (G) 2007 lumpsum
9 DSP Meryll Lynch 2007 lumpsum
10 Rel Vision Retail Fund(G) 2007-till date SIP:Rs 1000/-/month
11 Rel Diversified Power 2007-till date SIP:Rs 1000/-/ month
12 SBI Contra Fund 2007-till date SIP:Rs 1000/-/ month

I request you to please advice me on the following

1. Is my mutual funds portfolio ok, should I continue with all or discontinue some of them and acquire new ones.
2. I want to take additional 3 to 5 SIPs. Planning on HDFC Top 200, DSPBR Top 100 Equity and some more. Could you please guide me.
3. Any other relevant advice,like any lump sum investment. In total I can spare about 40 to 50K for any lumpsum investment, exclusive of SIPs.

Will really appreciate your advice.

Regards

Shradha

Reply

89 ANIL KUMAR KAPILA

Hi Shardha
Investments in equity mutual funds are done to meet your long term goals.When you started your investments did you have any goal in mind? It appears that you have randomly selected some funds and invested without constructing a portfolio. Normally a well designed portfolio should not have more than five to seven funds.SIP is the best mode of investment.Once you start investing you have to do it regularly and systematically.After you start investing you have to track your portfolio to ensure that you do not remain invested for long in a nonperforming fund.
It appears that you have not followed these principals of investing.You have selected too many funds.In most of the funds you have done lump sum investments.Since you have not tracked your portfolio it has many nonperforming funds in it.
To construct a proper portfolio please read the post – Best Mutual Fund For SIP.

Reply

90 Shradha

Dear Anil,

Thanks for the prompt reply. Actually the investment was done as advised by an agent at that point of time, as we were totally new investors & hence quite clueless .

But now after reading your articles, I feel that I will be able to make a better portfolio this time and I will definitely track it.

Thanks again
Regards
Shradha

Reply

91 Saumya Agrawal

Dear Hemant

Thank you for a very informative article.

I am a salaried executive aged 22 years, recently started my job and wish to invest in mutual funds but have some queries.

What is the difference in investment thro SIP and lumpsum (when market is low, like now a days). Is there any risk? Can I combine both at any period of time in future (as per availability of surplus funds like bonus etc.).

Secondly about time horizon, can I opt to exit any time/remain for more time, during the tenure of my investment. Suppose I start a SIP for 5 years initially, can I redeem my funds say after 4 years and on the other side, can I opt to extend it for 1-2 years more, if I wish to continue the investment

About taxation, at one place you mentioned, “So in your case investment done in first 9 years will qualify for long term capital gain but the investments done in 10th year will come under short term capital gain & you have to pay 15% on the gains”. How one can distinguish or calculate income of 1-9 years and of 10th year separately. Is it the income or investment that is subject to LTCG/STCG.

Thanks

Saumya

Reply

92 ANIL KUMAR KAPILA

Hi Saumya
It is good to know that you are planning to start investments in equity mutual funds just after starting your job.All mutual fund investments are subject to market risks.In the short term you may see a lot of volatility and returns from your investments may even be negative. But if you remain invested for a longer period of more than five years in equity mutual funds, there is a potential of creating wealth.
SIP is the best mode of investment as you don’t have to bother about market timing.In lump sum investments you become a hostage of market timing.Yes, you can do some lump sum investment when you see the market correcting substantially.You can combine both modes of investment.
You can select any tenure for your SIP and you can increase or decrease it as per your requirement.You can also redeem whenever you need money.You have to only see exit load and tax implications.In ELSS funds there is a lock in period of three years.

Reply

93 Saumya Agrawal

Sorry, one more question.

Is investment in mutual funds either by SIP or lumpsum qualifies for deduction under 80C.

Thank

Saumya

Reply

94 ANIL KUMAR KAPILA

Hi Saumya
Only the investments done in tax saving ELSS funds qualify for deduction under 80C.This deduction will not be available from next year.

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95 Karthikeyan

Hello,

Thanks for the wonderful article. It was very good and gave a lot of information about the MF. I am 26 now and investing in the below funds for the past 6 months. Can you please let me know whether my selection is good. I would like to continute this below SIP for 10 years.
1)HDFC 200 Equity – SIP 1000 per month
2)HDFC Equity – SIP 1000 per month
3) Sundaram Select Midcap – 500 per month
4) HDFC Mid-Cap Opportunities Fund – - 500 per month

Please check whether my selection is good and i can continue for 10years.

Cheers,
Karthikeyan

Reply

96 ANIL KUMAR KAPILA

Hi Karthikeyan
Your fund selection is very good but the portfolio lacks proper diversification as you have selected three funds from the same fund house. Normally we should have not more than one fund from a fund house as having so many funds from the same fund house makes your portfolio risky.

Reply

97 Karthikeyan R

Dear ANIL KUMAR,

Thanks for taking time and replying to my doubts. Could please expalin, What are the other funds that can be included in my portfolio(other Funds details) i can have 1 fund in a house and will stop the others(since i have more than one fund from a fund house ). You help is very much appreciated. Thanks a lot.

Cheers,
Karthikeyan

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98 ANIL KUMAR KAPILA

Hi Karthikeyan
Since you are young and just starting your investments in equity mutual funds you can afford to have aggressive portfolio. Please select one fund from each of the categories mentioned in the post.To start with have one largecap fund, one large and midcap fund, one multicap fund and one mid and small cap fund.You can retain any one fund of HDFC Mutual Fund and replace others from other fund house from the list given.

Reply

99 Karthikeyan

Thanks a lot Anil :)

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100 ANIL KUMAR KAPILA

You are welcome Karthikeyan.

Reply

101 Shradha

Dear Hemant & Anil,

Further to my post on 26th August, I have gone through your articles and decided on the following funds for SIP per month

Large Cap:
1. DSPBR Top 100 (1000/-)

Large & Mid Cap:
2. Fidelity India Growth(1000/-)
3. HDFC Top 200(1500/-)

Mid & Small Cap
4. IDFC Premier Equity (1500/-)

Multi Cap
5. HDFC Equity (2000/-)

Also, I have three SIPs of 1000/- each going per month since 2007, in Rel Div Pow, Rel Vision and SBI Contra. I want to discontinue Rel Power and start Rel Equity Opp for Rs 1000/-. For now I want to continue the Rel Vision and SBI Contra atleast till market picks up and I get a better ROI. Therefore I will have a total of 8 SIPs with an investment of 10000/- per month. I am looking at long term.

Please advice if my thinking is correct and whether the portfolio looks ok

Thanks & Regards
Shradha

Reply

102 ANIL KUMAR KAPILA

Hi Shardha
The funds selected by you for your portfolio are very good.However for a monthly investment of Rs 10000/- eight funds are too many and do not provide any benefit of diversification. This is only diversification of numbers and not of style. Moreover you should not have more than one fund from a fund house in your portfolio as it increases your risk.Hence I would suggest you to consolidate.You can merge your investment in HDFC Equity with HDFC Top 200 and Reliance Vision with Reliance Equity Opportunities.

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103 Shradha

Thank you so much Anil.

Regards
Shradha

Reply

104 ANIL KUMAR KAPILA

You are welcome Shardha.

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105 raja ram

Dear Sir,

I would like to have your valuable opinion with respect to my current Mutual Fund / SIP Portfolio, as mentioned below.

My plan is to build a corpus of Rs. 1 Crore within a span of 10 years. Hence, please advise the amount to be added to the present contribution / selection of funds, in order to achieve this target. I am 43 years old, working in a private sector company.

Thanking you,

Name of the fund Opton Start Date SIP Amount per month Holding Units Avg Price in Rs. Value at Cost in Rs.

Mutual Fund
Reliance Banking Fund Growth 14.12.2010 332.2060 109.8292 36,485.92
Reliance Equity Opportunites Growth 14.12.2010 544.0920 37.1583 20,217.53
Reliance Regular Savings – Equity Growth 12.12.2008 884.2240 13.4845 11,923.32
SBI Magnum Sector Umbrella Contra Growth 12.12.2008 367.8190 29.1900 10,736.64

SIP
Reliance Growth Growth 26.11.2008 2,000.00 171.5650 373.0365 64,000.01
SBI Magnum Sector Umbrella Contra Growth 02.12.2008 2,000.00 1,373.2470 48.0613 66,000.04
HDFC Top 200 Growth 20.02.2010 2,000.00 188.8190 201.2516 38,000.13
Reliance Diversified Power Fund Growth 28.02.2010 1,000.00 402.3700 69.5873 27,999.84
Sundaram Select Midcap – Appreciaton Growth 14.12.2010 2,000.00 119.9530 150.0599 18,000.14

Regards,
Ram

Reply

106 ANIL KUMAR KAPILA

Hi Ram
Presently you have SIPs in five funds with total amount of Rs 9000/- per month. Considering annual return of 12% this is very low to achieve your target in 10 years.It is difficult for me to advise you about the amount by which you must increase your investment as I have no information about your income, savings as well as the other investments and expenses like insurance etc.
Presently you are invested in five funds of Reliance Mutual Fund and two of these are sector funds.This makes your portfolio very risky.Moreover the performance of some of these funds is poor.
To construct a proper diversified portfolio I would suggest you to read the post – Best Mutual Fund For SIP.

Reply

107 raja ram

Dear Sir,

Thank you for the prompt response.

We have gone through your post “Best Mutual Funds for SIP” and found it most useful, as it clearly explains the criteria for selection of Mutual Funds.

My wife and I would like to invest a further amount of Rs. 40,000/- per month (Rs. 10,000 each in 4 funds) in SIPs. Accordingly, we have shortlisted the following Mutual Funds for investment through the SIP mode:

Large Cap:

• DSPBR Top 100
OR
• ICICI Prudential Focused Bluechip Equity

Large & Mid Cap:

• HDFC Top 200

Mid & Small Cap:

• IDFC Premier Equity
OR
• Sundaram Select Midcap

Multi Cap:

• HDFC Equity
OR
• Reliance Equity Opportunities

We would appreciate your advice in order to proceed.

From the earlier portfolio presented to you, could you please suggest which funds we should exit from? We would be truly grateful for your opinion in this matter

Thanks once again.

Best regards,
Ram

Reply

108 ANIL KUMAR KAPILA

Hi Ram
You can have the following funds in your portfolio.
1 ICICI Prudential Focused Bluechip Equity
2 HDFC Top 200
3IDFC Premier Equity
4 Reliance Equity Opportunities.
Have 60% allocation in core and 40% in satellite. Keep tracking the performance of your funds after starting your SIPs. The performance of the fund can be checked by comparing with its index, category average and peers.
You can consolidate by merging your SIPs in Reliance Growth and Reliance Diversified Power with Reliance Equity Opportunities.
If you do not need the money right now you can remain invested in the funds where you have done lump sum investments till the market turns.

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109 raja ram

Dear Sir,

Thanks for the prompt reply. We will go by your advice and invest accordingly as well as keep regular track on the performance of our funds.

Best regards,
Ram

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110 ANIL KUMAR KAPILA

You are welcome Ram.

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111 DHARMESH BHAGAT

Dear Mr. Hemant & Mr. Anil,
Great knowledge base created on Mutual Fund investment by you. I thank you for the same as it proves to be a great help for person like me who is a new entrant in world of mutual fund. I have started investing in MF since June-11 onwards and request you to review my portfolio:
1) UTI Dividend Yield Plan: Rs.3000 p.m. (dividend payout);
2) UTI Master Value Fund: Rs.1000 p.m. (dividend payout);
(I want to convert both the above funds to “growth option” after 1 year or even before)
3) HDFC Top 200: Rs.3000 p.m. (Growth);

I can invest further Rs.3000 p.m. (max Rs. 10000 pm). My MF investment time horizon is about 10 years. I want to create corpus for my child education, who is 8 years of age and is in 4th standard. My target corpus would be 30 to 40 lacs. Request your review on my existing portfolio and suggest changes (if any). Also suggest some funds for balance amount to be invested (Rs.3000 p.m.) looking to my set goal. My age is 36 Years. My average take home salary on monthly basis is Rs. 32000-
Dharmesh Bhagat
Vadodara, Gujarat.

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112 ANIL KUMAR KAPILA

Hi Dharmesh
It is good to know that you want to construct mutual fund portfolio for education of your kid.I would suggest you to read the post – Best Mutual Fund For SIP for this.It is advisable to have select only one fund from a fund house. For your additional investment you can select one large cap fund.

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113 DHARMESH BHAGAT

Hello Anil Kumar ji,
Thank you very much for your suggestion.

For large cap fund, I want to opt for ICICI Prudential Focused Bluechip Equity Fund (G) say Rs. 2000 or 3000 p.m. Is this fund okay ??

I am also investing in UTI Master Value Fund (Rs,1000 p.m.) which is small & mid cap fund. Is this fund okay??? should I increase my investment amount to Rs.2000 p.m.???

Dharmesh.

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114 ANIL KUMAR KAPILA

Hi Dharmesh
Both ICICI Prudential Focused Bluechip Equity and UTI Master Value are good funds. You can consider both these funds for investment. However please ensure that your portfolio does not have more than one fund from a fund house.

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115 DHARMESH BHAGAT

Dear Anil Kumarji,

Can you please technically explain the exact difference between “dividend payout”, “dividend re-investment” and “growth” option. If I am targetting 30-40 lac corpus in 10 years can that be attained thru “dividend payout” or “dividend re-investment” or “Growth” option would be the best!. Please suggest with some examples (if any).

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116 ANIL KUMAR KAPILA

Hi Dharmesh
If you are investing to meet your long term goals then growth option is the best. You should opt for dividend payout only if you want to use the money which you get by way of dividend payments. Please note that whenever you get some dividend payment, the NAV of the fund gets reduced to the extent of dividend payment. In dividend reinvestment the dividend declared by the fund is not paid to you but is reinvested to buy more units for you. Moreover from the next year the dividend payment is also going to be taxed. So it is best to stick to growth option only.

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117 DHARMESH BHAGAT

Dear Anil Kumarji,
Thanks for your prompt response. I have already shared with you my MF investment profile which has two fund under dividend payout mode. One UTI Dividend yield fund & UTI master value fund. I invest fund thru my close friend but some how he is not convinced to convert these two fund into “growth” option for me. He is suggesting to move for “re-investment of dividend”. I am argueing for “growth” option. I am confused and don’t know what to do!.

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118 ANIL KUMAR KAPILA

Hi Dharmesh
You have to consider tax implications from next year. Right now dividend reinvestment option is also fine.

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119 DHARMESH BHAGAT

Hello Anilkumar Ji,
Can you please suggest me some best perfoming tax saving ELSS funds. I have to invest 40,000 p.a. Would it be advisable to invest in ELSS as it has lockin period of 3 years from each alloted units i.e. effectively it becomes 6 years (for total 3 years span). I am investing about 50,000 per year in EPS / VPF. Housing loan is now paid. hence gap of Rs. 40,000 has arised. Please suggest.
Dharmesh

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120 ANIL KUMAR KAPILA

Hi Dharmesh
You can consider Canara Robeco Equity Tax Saver. From next year you will not get any rebate on ELSS Funds. Hence you should think of some other option.

121 DHARMESH BHAGAT

Thank you anilkumarji….. for highlighting the discontinuation of tax exemption to me. What about National Pension Schemes (NPS) ??? Can you suggest some high return options!

122 ANIL KUMAR KAPILA

Hi Dharmesh
You can consider NPS. When you consider high return options, saving tax only should not be your aim. A good portfolio of diversified equity mutual funds only can give you decent returns.

123 DHARMESH BHAGAT

Thank you Anilkumarji….
One more doubt I want to get cleared….
Mutual fund units are now available in demat form also. If I open a demat account with a private DP like Sharekhan or say Jhaveri Securities and start SIP through them i.e. the DP would pick the money every month from my bank account and buy MF units from stock exchange and credit the same to my demat account….. would this be a safe and secured method??? I mean, going forward MF may also compulsorily get in to demat mode only….. What would be your advice sir……

124 ANIL KUMAR KAPILA

Hi Dharmesh
As far as investment in equity mutual funds is concerned it is best to keep the things as simple as possible. Construct a good portfolio and invest systematically every month via SIP route.
There is no advantage of investing in mutual funds via demat account.
I am hearing for the past ten years that investment in mutual funds is going to be made only through demat account. This has not happened and it is not going to happen in near future.

125 prakash

Hi Anil,
My question is which is best among HDFC top 200 ie Large & Mid Cap:
or HDFC equity ie Multi Cap. Can i have two funds from the same house. and otherone is that how i can judge whether the fund is not performing well just in 1 yrs of span as you said in former article. what are the decisive factor or criterion on which i can make judgement. as i am investing from 1.6 yrs in SBI magnum tax gain(g). but the return till now is not upto the mark in fact it is depressing (even in market high) it is not as par. hence i want discontinued this fund. If i withdrew sbi fund then is there would be any exit load. or will i get lumpsom amount just in single hand. i hear that in sip each installment should have 3 yrs span.

Please give your beneficial suggestion.

Reply

126 ANIL KUMAR KAPILA

Hi Prakash
Please read the post – Best Mtual Fund For SIP for selection of funds. Normally you should have only one fund from a fund house in your portfolio for proper diversification and to reduce the risk. After you have constructed the portfolio you must track the performance by comparing it with its index, average of the category and its peers.If you find that a particular fund consistently performs poorly based on this criteria then you should take corrective action.Moreover many rating agencies give star rating to funds.If you find that a fund begins to lose star ratings then it is the time to exit the fund.
Yes the lock in period for ELSS funds is three years. This means that you have to remain invested in the fund for three years to claim tax benefits.This does not mean that you must contine with your SIP for thee years.Morover you will not get any tax benefits from such funds from next year.Hence you can stop your SIP now.You will be able to withdraw your money only after you complete three years.

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127 suresh bhatt

I want to invest in Quantum Mutual fund with SIP mode. Is it profitable Investment in a long term.

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128 ANIL KUMAR KAPILA

Hi Suresh
You have only given the name of the fund house and not the scheme in which you want to invest.Moreover, while investing all the funds in the portfolio have to be considered.One fund is not to be considered in isolation.

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129 Anu

Hello Hemant,

My Investment Plan:
1) Investments in Mutual Funds: I have decided to invest Rs.6000 monthly through SIP’s and have prepared the following portfolio after some research.

1) ICICI Pru Focused Bluechip ( Rs. 1000 )
2) HDFC TOP 200 ( Rs. 1000 )
3) IDFC Premier Equity ( Rs. 2000 )
4) IDFC Smal & Mid-Cap Equity ( Rs. 1000 )
5) HDFC Equity( Rs. 1000 )

I have already started with IDFC Premier Equity, IDFC Mid & Small Cap and HDFC TOP 200 this month. The other three I will start after being sure that I am going on the right path. So my question to you is, whether my selection of funds is right or does it require any change. Also, I was not sure whether to have HDFC Equity or should I replace it either with HDFC Mid-Cap Opportunities or with DSP BR Micro Cap Fund.

Horizon: My horizon is long term (15 years) and since I don’t have too many responsibilities at this moment I am willing to take more risks in anticipation of greater returns.

2) Tax Saving & Insurance (Aim to take benefit under section 80(C) tax benefit of upto Rs. 100000)
(i) PPF Account: Rs. 70,000 annually ( Should I stay with this or should I take Jeevan Anand for next 25 years)
(ii) I have taken Jeevan Shree and am paying Rs.25000/ annum

3) Saving : I have also started a Recurring Deposit of Rs.10,000 per month for 1 year and the deposit will be used to fulfill the slot of Rs.100000 investment as lump-sum planned for each year. This strategy I wish to continue for years to come.

Kindly advise if I have designed the investment structure right and would like to know the possibilities of optimizing it further.

Thank you

Reply

130 ANIL KUMAR KAPILA

Hi Anu
For an investment of Rs 6000/- per month you do not need five funds. Three will be fine.Moreover, you should not have more than one fund from a fund house. You can consolidate by selecting only one fund from HDFC Fund House and IDFC Fund House.
Having recurring deposit to accumulate Rs 100000/- for lump sum investment does not make any sense. Systematic investment is the better mode.It will be better if you increase your SIP amount to Rs 16000/- per month.

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131 Sham

Is mutual fund best vehicle for Investment of Retail investor ( equity Only)?

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132 ANIL KUMAR KAPILA

Hi Sham
Yes , investment in equity mutual funds via SIP route is the best mode of investment.

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133 Neha

Hello Sir,
I Am very new to the Mutual funds and stuff, I don’t have too many responsibilities at this moment and can take risks where i would expect good returns in 3-5 years before marriage, these amount would be useful to my parents.

1) HDFC TOP 200 ( Rs. 1500 )
2) IDFC Smal & Mid-Cap Equity ( Rs. 1500 )
3) HDFC Equity( Rs. 1500 )
4) UTI Dividend yield Growth (Rs 1500)
5) Reliance Gold Saving Fund Growth Plan (Rs 4000)

So please look at the below mentioned funds which i have opted for and provide you valuable suggestions.

Thanks
Neha

Reply

134 ANIL KUMAR KAPILA

Hi Neha
All funds in your portfolio are very good. However your exposure to gold is on the higher side. Normally it should not be more than 10%. This makes your portfolio very risky. Since you are young and prepared to take risk it should be fine. Hopefully your investment in gold may turn out to be good at the time of your marriage. Best of luck.

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135 Manju

Respected Hemantji
I am 45yr old and in govt service I alredy invest in these fund through sip
1.Rs 2000/ in HDFC TOP 200.
2.Rs.1000/ in HDFC MID CAP OPP.FUND
3.Rs.1000/ in ICICI PRU FOCUSED BLUCHIP EQUITY FUND
4.Rs.1000/ in TATA DIVIDEND YIELD FUND
5.Rs.1000/ in TATA EQUITY P/E FUND
I want to discontinued in Tata dividend yield fund and tata equity p/e fund and start sip in RELIANCE EQUITY OPPORTUNITIES FUND Rs. 2000/ and rs 500 in Reliance gold saving fund. Pl. comment on my portfolio and give me any other advise my time horizen is 10 to 15 year when I will retire from service.
Thanks

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136 Vijendra Singh

Hi,

Some of the funds in your portfolio are consistent performers like the HDFC Top200, HDFC equity, UTI dividend yield.keep youeself invested in these fundds and in future try to increase your allocation to these funds.

As you are new to MFs, I suggest you to start with large caps only.
You can include Frenklin Bluchip, IDFC premier equity, BSL frontline and other similars.
In starting keep away to the secotrials funds.

Hope it helps.

Thanks

Reply

137 manjo3311

Hi
I am 22 years old and just started with a job. I plan to invest 5K per month in mutual funds. Infact, I already opened an account and made initial investments in different schemes today itself. I chose following funds:
1.) HDFC TOP 200 (1K PER MONTH) > LARGE CAP FUND
2.) HDFC EQUITY (1K PER MONTH) > MULTI-CAP FUND
3.) HDFC PRUDENCE(1K PER MONTH) > BALANCED FUND
4.) HDFC MONTHLY INCOME-LONG TERM(1K PER MONTH) > DEBT ORIENTED FUND
Now, my questions are:

1.) Is my portfolio right?

2.) 1k which is not shown above is lying pending to invest in gold. Since I donot have demat account, I cannot buy gold etf. I was planning to invest in reliance gold fund but after reading one of your articles, I have put an idea on hold. Kindly suggest me on how to make investment in gold then???:O

3.) Now comes the main question. In order to set up SIP with fundsindia, I am facing some problem since they dont have tie up with my bank for auto debit (something like that). But I didnot want SIP in first place. I rather plan to invest myself in a disciplined way every month after watching market. Now the question is : Does it make any difference whether I invest in hdfc top 200 via SIP or myself invest every month(flexible in this case). I mean, by investing manually every month, am I missing some of the advantages of SIP like compounding returns, lesser maintenance charges by mutual fund house to SIP customers or anything like that..:O

4.) Also, I need to have tax rebate. What are the best investment options for tax savings with decent returns?? Initially, I wanted to add hdfc tax saver as well but lock in period of 3 years made me stay away from that.

Kindly reply to these issues of mine. Shall be very thankful to you.

Reply

138 ANIL KUMAR KAPILA

Hi Monjo 3311
This has already been answered.

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139 manjo3311

Hi

Can you please copy paste the answers for the 4 ques asked because it woud be difficult for a novice investor like me to go through each already answered questions to find my answer. Thanx

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140 ANIL KUMAR KAPILA

Hi Monjo 3311
Only yesterday you had asked the same questions on some other post. Obviously you have copied and pasted these on this post. You should know where these questions were asked. Whenever I am able to locate I will let you know.

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141 ANIL KUMAR KAPILA

Hi Monjo3311
Please read the comments in the post -Best Mutual Fund For SIP to get your answer.

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142 mir2507

Dear Hemant and Anil

Very happy to see your guidance changing the way people are making their investment decisions.

I am 28 and want to start by investing 12.5 k per month in the below mentioned funds. Please correct them and reallocate them if you see any issues. Feel free to add or remove to make the portfolio correct. I want to continue investing for another 10 years through SIP.

HDFC Top 200 (Rs. 2500)
Fidelity Tax Advantage (G) OR Fidelity Equity Fund (G) —- (Rs. 2500)
HDFC Equity (G) — (Rs. 2500)
Canara Robeco Equity Tax Saver — (Rs. 2500)
DSPBR Top 100 — (Rs. 2500)

Thanks

Reply

143 ANIL KUMAR KAPILA

Hi Mir2507
You have selected two tax savers. From next year you are not going to get any income tax benefits from these funds. Moreover your money is going to be locked for three years.
You have selected two funds of HDFC mutual which is not the correct approach.
You can consider these funds :
1 ICICI Prudential Focused Bluechip Equity Fund.
2 Reliance Equity Opportunities Fund.
3 HDFC Midcap Opportunities Fund.
You can retain DSPBR Top 100.
You can invest in tax savers for six months if you want and then exit and divert the investment to equity funds of your portfolio.

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144 mir2507

Thanks Anil.
I will drop the tax savers and go with the below mentioned portfolio.
Just a small question. (2) and (3) are mostly into midcaps and is it advisable to have 50% exposure to midcaps ? Will it do good to add another large cap and take the portfolio to 5 mutual funds ? Please clarify.

1 ICICI Prudential Focused Bluechip Equity Fund
2 Reliance Equity Oppor – RP (G)
3 HDFC Midcap Opportunities Fund
4 DSPBR Top 100
5 —-(fidelity equity or another plan of your choice)—-

also in (2) there are two plans retail and institutional. I have selected retail and growth. Is it correct ?
Thanks

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145 ANIL KUMAR KAPILA

Hi Mir2507
Four funds will be fine. There is no need to add any other fund. Reliance equity opportunities fund is a multicap fund and not small cap fund. It is not necessary to invest equally in all the funds. You can invest more in large cap funds and less in multicap and mid and small cap fund. The exact allocation will depend on your risk appetite. Retail and growth option are fine.

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146 mir2507

Thanks Anil

Finally decided with the below combination. (13 k/ month)

1 ICICI Prudential Focused Bluechip Equity Fund – 3500 Rs/month
2 Reliance Equity Oppor – RP (G) – 3000 Rs/month
3 HDFC Midcap Opportunities Fund – 30000 Rs/month
4 DSPBR Top 100 – 3500 Rs/month

As mentioned again and again in this thread will revisit the portfolio once a year.

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147 ANIL KUMAR KAPILA

Hi Mir2507
Your portfolio is perfect. Best of luck.

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148 AJ

Hello,

I have started an SIP in four of the MFunds and tax savings also ON FEB2011, Kindly let me know if my selection is good, and I will keep this sip continue minimum 7 years.

HDFC TOP 200 G – 5000/-
FIDELITY EQUITY FUND G – 2000/-
RELIANCE RSF BALANCED G – 1000/-
DSPBR MICRO CAP FUND G – 1000/-
HDFC TAX SAVER G – 4000/-
FIDELITY TAX ADV G – 2500/-

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149 ANIL KUMAR KAPILA

Hi AJ
Your portfolio lacks proper diversification across fund houses. You should not have more than one fund from a fund house.

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150 kiriti

I understood the difference b/w growth and re-investment option.I am doing SIP’s in UTI dividend re-investment plan.I want to know how will it affect my tax?I was mis-guided by the UTI person that dividend option is better than growth.Today i understood the difference.So please let me know about the taxes sir.

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151 padmavathi

hi sir,
i invested Rs.50000 in equity mutual fund about 2 months back.But now i noticed thar the total fund value has gane below the investment and now it stants to Rs.48000.I’m not happy with the situation.What should i do now?Please reply me as soon as possible.

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152 Hemant Beniwal

Hi Padmavati,
Your portfolio is only down by 4% & your are worried.
Do only one thing – LEARN.

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153 ANIL KUMAR KAPILA

Hi Padmavathi
Is this your only investment in mutual funds? What was the purpose of this investment? Have you invested lump sum?

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154 kiriti

I understood the difference b/w growth and re-investment option.I am doing SIP’s in UTI dividend re-investment plan.I want to know how will it affect my tax?I was mis-guided by the UTI person that dividend option is better than growth.Today i understood the difference.So please let me know about the taxes sir.

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155 ANIL KUMAR KAPILA

Hi Kirti
If you are so much concerned about the taxes then why don’t you go for growth option?

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156 kiriti

Actually the problem is that I have already started my SIP’s and now the person from UTI said I cant change my plan from re-investment to growth.
Please help me out.Can I change my plan?If yes, how?

thanks in advance

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157 ANIL KUMAR KAPILA

Hi Kirti
Yes you can change your option without any problem. A transaction slip is attached to your account statement which gives you various options. You have to just tick on the growth option and deposit the slip at KARVY or UTI office. Don’t forget to to take acknowledgement.

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158 Umesh

Hi

You explained very well in question about “Dividend or Growth”

And conclude with the words “However, the truth is that it does not make a dime of difference which option you choose, from the pure investment yield point of view.”

But you end with “There is a caveat, though – Investors should opt for that option that minimizes their tax liability.”

Is the tax treatment for these 3 types are different? Will you please be kind enough to explain the same using some example?

Thanks

Umesh

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159 Hemant Beniwal
160 Umesh

Hi

You explained very well in question about “Dividend or Growth”

And conclude with the words “However, the truth is that it does not make a dime of difference which option you choose, from the pure investment yield point of view.”

But you end with “There is a caveat, though – Investors should opt for that option that minimizes their tax liability.”

Is the tax treatment for these 3 types are different? Will you please be kind enough to explain the same using some example? An investor always welcomes
the option that minimize ones liability.

Thanks

Umesh

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161 Hemant Beniwal

Already replied.

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162 Padmanabhan

Hi,

I have today gone through an article in moneycontrol website about mutual fund investments. It says that the MF industry in India is approaching a standstill. The returns accumulated in the last 10years were lost in during the ongoing slowdown / fall in equity market as there are no enough talents to manage the funds properly.

I thought of knowing your comments on the above website and article…

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163 Purvesh

I think this article is not completely true, what i know mutual fund managers are more equipped with tools and information than what they had 10 years back. Even the returns from some of the fund houses are 20-25 fold in the same 10 years time the article is suggesting. Infact i found there are very good fund managers available with many fund house having different view points and have proven their perspective as well. Probabaly prashant jain (HDFC) would be on highest ranks as he handle 4 largest funds of industry simultaneously. Also fund managers of DSPBR, IDFC , ICICI, Franklin are great return earner.

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164 ANIL KUMAR KAPILA

Hi Padmanabhan
Investments in equity mutual funds are subject to market risks. The returns given by a mutual fund are not only dependent on the talents of fund managers. The fund house also has a role to play. In good fund houses systems are in place so that the role of an individual fund manager is considerably reduced. If the market crashes even a good fund house and a star fund manager can not do any thing as they are not magicians.

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165 prashant chaudhary

Dear Hemant Ji..
i am confused to invest in equity/gold/mutual fund/LIC policy/Child Plans, there are so many products in market to invest.
my question is where i get highest return in next 15 years subject to risk. i have to invest for my daughter education, her marriage etc but confused to choose right track. i can invest Rs 2000 monthly and i am a Govt emplyee
please help in this regard

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166 ANIL KUMAR KAPILA

Hi Prashant
Invest in diversified equity mutual funds.

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167 Purvesh

Hi, prashant chaudhary
There are no plans which can give you highest returns and no body give guarantee for that. All plans which comes from insurance companies are having their own charges which are on higher side compare to mutual funds. So invest in mutual fund for decent returns which beats inflation in long run as well as build some corpus for any plans you have. First thing you do is to plan how much you will need for your daughter’s education and marriage using tool available on http://www.tflguide.com/2011/04/franklin-templeton-family-solutions.html

This will give you rough estimated amount you need to invest for your all future plans. They are all inflation adjusted values so it will help you in planning things in a better way. Also try to diversify your investments in various investment products (equity/ debt) according to your risk appetite. I hope you have got your answers, of course Hemant will give you more insight into this.

-Purvesh

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168 Padmanabhan

Hi Purvesh,

Thanks for your comments. The article in the moneycontrol was written by the fouder of investors are idiots (crazy website though).

I was a trading in Commodity & Nifty futures but slowly realised the risk in it. After losing a handful of money in trading I happened to go through various articles of Hemant which are really eye-openers. Now I am investing on HDFC & Reliance SIPs.

But this article and the website is finding faults in mutual funds in a methodological way and hence I thought of seeking tflguide’s opinion on the same.

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169 ANIL KUMAR KAPILA

Hi Padmanabhan
It is not uncommon to find articles by insane people in some personal finance websites.Hence it is advisable to stick to only a few websites like Value Research and Mint Money.

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170 Purvesh

Yes Anil is right , it is important to get knowledge but it is equally important to gain it from most admirable source, just like Value research and of course our own TFL.

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171 Padmanabhan

Hi Purvesh,

Yeah I realised that anil is right. I will refine my knowledge gathering. Thanks

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172 Padmanabhan

Hi Anil,

Thanks for the suggestion(s). Right now, I am keeping a continuous track on my SIPs. I will maintain the discipline, wait & watch the markets.

If in doubt, i will ask.

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173 prashant chaudhary

Hi Purvesh,

Thanks a lot for giving Idea…

waiting for more comment from Hemant Bhai

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174 Soma Giri

Hi,
I have invested in the following mutual funds through SIP since 14 months. UTI – DIVIDEND YIELD FUND GROWTH OPTION (Rs 1000/pm)
UTI-EQUITY FUND (Rs 1000/pm)
UTI-MNC FUND – GROWTH PLAN (Rs 1000/pm)
UTI-MASTER VALUE FUND – GROWTH PLAN (Rs 1000/pm)
UTI OPPORTUNITIES FUND – GROWTH PLAN (Rs 1000/pm)

These are another two which I have started 2 months back as one time investment.
HDFC Equity (Rs 15000)
HDFC Top 200 (Rs15000).
Please suggest any necessary changes required.

Reply

175 Purvesh

Hi Soma giri,

I would like to pitch in as i can see some clear mistake in your investment which many people can make. There is no investment diversification. Also one time investment can go wrong. Instead do STP if you have some spare money to invest. You are heavily investing in one fund house which can go wrong anytime. Also there are many funds which can not be handled easily. You need both diversification in style and across fund house. Consider investing 70% in large and large and mid cap fund and rest in mid cap/small cap/multi cap funds. Do remember to diversify across fund houses. I would suggest following
1) ICICI Pru focused blue chip or Franklin bluechip (Large cap)
2) HDFC Top 200/ UTI divident yield (Large and mid cap)
3) Reliance Equity opportunities/ HDFC Equity/ Reliance regular savings fund (multi cap)
4) IDFC Premier equity or DSP balckrock small and midcap or DSPBR micro cap.

This is just example of how you can select the funds, better research on valueresarchonline.com and find it your self. I hope Hemant will also help you in this.

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176 ANIL KUMAR KAPILA

Hi Soma Giri
Although I can not find fault with any of the funds you have selected but Purvesh is right, by keeping all your eggs in one basket you are taking a huge risk. Normally you should not have more than one fund from a fund house in your portfolio. By investing lump sum you become a hostage to market timing. Fortunately your investment in lump sum is not much and it has been done when the market is down. So you may not have much adverse impact.

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177 VIGNESH

Hi
I am 21. I started reading abt mutual funds for the past six months. I have selected some funds in which i want to start sip for the coming years.I need your help so that i should not land up in a bad mutual fund. I am a regular reader of this website. please don’t hesitate to tell my flaws. Core-9000 satellite-5000(65 percent core and 35 percent satellite)
ICICI Prudential Focused Bluechip Equity 4000 Large cap
HDFC Top 200 Fund 3000 LARGE CAP AND MID CAP
Birla Sun Life Dividend Yield Plus – Growth 1000 MIDCAP AND SMALL CAP
IDFC PREMIER Equity 2000 MIDCAP AND SMALL CAP
HDFC prudence 2000 Balanced

SECTOR FUNDS
ICICI Prudential FMCG Fund 1000
Reliance Banking Fund 1000

Total —————————————————————-14000

2. And some 1000 every month to gold etf?
Tell me the taxation for Gold ETF and Gold physical gold. I have a demat acc also.
I am a long term investor. which mode of buying will attract low charges?
Thanks for your valuable advice in advance.

Regards
vignesh B

Reply

178 ANIL KUMAR KAPILA

Hi Vignesh
It is good to know that you are thinking of investing in mutual funds. Your fund selection is very good. I have only a few points. It is better to invest only in one fund of a fund house.So you can select one from two HDFC Funds. If you are keen to invest in a balanced fund you can also consider HDFC Balanced fund. Regarding sector funds instead of investing in Reliance banking you can consider Reliance Pharma. Investing in physical gold can invite wealth tax. You can consider Gold ETF or a monthly SIP in a Gold fund.

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179 VIGNESH

Hi
I want to know your comments on my core and satellite approach . Is that good? 1. should i need to increase my core portfolio more by decreasing the midcap and sector?
2. Taxation of Gold Etf and Gold Mutual funds while Redemption? In which one Brokerage will be less?

3.Kindly guide me as i am new to invesments. and also suggest me some books regarding stocks, Mutual funds and personal finance.
Regards
Vignesh.

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180 ANIL KUMAR KAPILA

Hi Vignesh
Your core and satellite approach is correct. Since you are a young investor you can take more risk. There is no need to change your allocation between core and satellite.
As you are new to investments please go through all the posts of Hemant. Articles are also available on Gold Mutual Funds and ETFs.
For Mutual Funds you can read Mutual Fund Insight. For stocks you can refer to Wealth Insight.You can also visit Value Research website. For Personal Finance many magazines like Outlook Money are available.

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181 VIGNESH

Hi
thank you very much…

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182 Mahesh Kudva

I am 26years old. Investing in Mutual fund through SIP. I plan to invest Rs1000 each in Birla Sunlife Midcap fund, HDFC Top 200, Reliance Growth and ICICI Pru Dynamic plan (All are growth fund). Also like to add IDFC premier equity fund, DSPR BR Top 100 equity, Index fund and Gold fund. Please suggest if the above portfolio needs any changes?

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183 ANIL KUMAR KAPILA

Hi Mahesh
Birla Sunlife Midcap and Reliance Growth are nonperforming funds. Before investing check the track record of the funds. Moreover, you don’t need eight funds in your portfolio. Three or four funds are good enough.

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184 mahesh Kudva

I have changed my portfolio and plan to invest in HDFC top 200 (Rs 1000), IDFC premier Equity (Rs2000), ICICI pru focused bluechip (Rs 1000), DSPBR TOP 100 and Reliance equity opprtunity (Rs 500 each). Also like to add SBI or Kotak Gold saving fund. Please review my current portfolio and suggest any changes needed?

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185 ANIL KUMAR KAPILA

Hi Mahesh
Your current portfolio is fine.

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186 Sunita

hi
i am going to start investing 1000$ every month SIP – i want to know is it better to diversify in 10 different types of funds i.e. 100$ each fund eg; or Franklin Templton Global return, Schroders emerging market, World mining fund and like this 7 other funds or putting in 2 or 4 funds with 20 % 0r 30% allocation.

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187 ANIL KUMAR KAPILA

Hi Sunita
Four or five funds should be fine. Over diversification is not needed.

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188 Sunita

Thanks for the reply is it some where if i can email you my portfolio

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189 RAJ

hi,

i am RAJ 23yr old.just one year before i started my career in soft company.

my salary is 24k per month..so i planned to invest 10k(per month) for 10 years in sip.

so shall i go with 2 large cap and 2 large & mid cap or one in large cap,

one in large & mid cap, one in multi cap and one in small & mid cap.and i

have selected few funds according to these categories.

large–>ICICI Pru Focused Bluechip Eqty (G),DSPBR Top 100 Equity Reg,Franklin India Bluechip

large @ mid–>HDFC Top 200,Birla Sun Life Frontline Equity,Fidelity India Growth Fund (G),UTI Opportunities,UTI Dividend Yield

multi–>Quantum Long Term Equity,HDFC Equity,DSPBR Equity,Fidelity Equity Fund (G)

small and mid–>IDFC Premier Equity Fund,ING Dividend Yield,BSL Dividend Yield Plus-G

i m very much confused about it..so give me a suggestion plz..

Reply

190 ANIL KUMAR KAPILA

Hi Raj
Please refer to the post – Best Mutual Fund For SIP for reply.

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191 Madhu Mohan

Hi,

I am 25 yrs old and willing to invest through SIP’s, either in HDFC, Birla sun life or ICICI pru.. Can u please help me out to find the best SIP plans to look into.. My investment will be Rs.5000 every month for minimum of 3 years.. Then i can increase rapidly..

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192 ANIL KUMAR KAPILA

Hi Madhu
Read the post – Best Mutual Fund For SIP.

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193 V.A,Bhat.

Hi,
I have invested Rs.2000 each per month in DSPBR small N midcap and Top100Equity. I want to invest Rs1000 more.Which of the Franklin fund you suggest?

With Regards

Reply

194 ANIL KUMAR KAPILA

Hi V A Bhat
I don’t understand why you are looking for only a Franklin fund for investment as a lot of good funds are available from other fund houses. Please read the post – Best Mutual Fund For SIP.

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195 Paresh N

i had a Question, yet a novice in investments so please bear with me, i have invested in (ULIP) Max NY – Capital Builder – Growth Super Fund (SIP) the duration is for 20 years started since 25/4/2010 , was told by the agent its a pretty good scheme, wanted to know 1) if it is worth an investment and 2) if i can reduce the duration to 10 years, please advice, thanks

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196 ANIL KUMAR KAPILA

Hi Paresh
Insurance should never be mixed with investment. ULIP products are very expensive and must be avoided.

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197 Amit

Hello, I have SIP’s with two HDFC funds :
(1) HDFC Long Term Advantage Fund – Gr
(2) HDFC Growth Fund Gr

I am in need of those SIP money asap when I contact my agent; he said that there is a 3 year lock in period and that there is no way to get those money back before lock-in period expires.

I’m stunned to learn that policy; I’d like to know if there is any way to get money out by paying early redemption fees ?

Thanks,

Reply

198 Hemant Beniwal

Hi Amit,
This is an old trick used by Mutual Fund Agents – Tax Fund When no tax saving needed. As Agent gets more revenue so he sacrifices your liquidity, assest allocation & returns. There is no way to redeem HDFC Long term Advantage fund as it is having compulsory lockin of 3 years. You can’t exit it even by paying any penalty so forget about this money. But you can definitely withdraw money from HDFC growth fund which is a normal diversified equity fund. There may be 1% exit on the units which you have purchased in last 1 year plus there can be a 15% Short Term Gain if you have some short term gains.

Reply

199 Sanjay Kumar Gupta

Sir I am investing in HDFC Top 200 (Rs. 1000.00), HDFC Tax Saver (Rs. 1000.00), Reliance Mutual Fund (Gold) (Rs. 5000.00) per month Now I Have Rs. 5000/- Extra per month please suggest some more Mutual Funds to invest

Reply

200 Purvesh

Hi Sanjay,

I don’t know whats your age, but at any age Gold should not be core part of portfolio( at max 5-10%). Are you aware of advantages and disadvantages of gold fund? If not please read that first. One more thing your portfolio requires diversification, as you are investing in two funds of same fund house. Also from FY12-13 tax benefit of ELSS fund will go away, so you need to adjust that also. As a general rule your portfolio should be divided in equity and debt according to age (for example for a 30 year old general rule says 70 equity and 30 in fixed income). But this depends on risk taking capacity of person.

I would suggest to re balance your portfolio in following way.
For example Equity Portion
1) Large cap: ICICI prudential Focused Blue chip
2) Large and Mid cap: HDFC Top 200
3) Mid cap or small cap: IDFC Premier equity fund

From this allocate 80% of your equity portfolio in Large and Large and Mid cap fund. Rest 20% in midcap or small cap fund.

-Purvesh Mehta

Reply

201 PN Reddy

Dear Hemant,
I have taken insurance policy for my father in Reliance, a policy called RLIC-Highest NAV Advntg. From last one and half year i am paying premium of Rs. 25,000 /six months. So till now i paid 75,000 but the present fund value is 60,458 Rs only. I am worried whether to continue or exit. Please help me with your kind suggestion.

Thankyou,

Sincerly,

PN Reddy

Reply

202 Hemant Beniwal

Hi Mr Reddy,
Highest NAV products were grossly mis-sold as highest return products. Almost all insurance companies launched such products in last 2-3 years. Even recently it was in news that IRDA is seriously thinking on discontinuing such products. Your reliance fund is on the same line. You should expect returns in comparison to debt not equities. If you are not satisfied with the product you can plan to surrender it. Polices that were launched last year have option to surrender the policy even after 1 year but you will get surrenders value after completion of 5 years. You can talk to your agent regarding the same.

You can also read this
http://www.tflguide.com/2011/03/lic-samridhi-plus-review-invest.html

Reply

203 rupen parekh

Sir

I have invested in Rs. 350,000 in 3 types of MF as lump sum & have 2 SIP of Rs. 5000 pm continue. Advice if its ok as my MF Portfolio is -ve. I want to invest in Gold fund SIP now. Pls advice.

Reply

204 Dhillon

What is the difference between Gold ETF Funds and Gold Saving funds?

Reply

205 Chandran

Hi Hemant,
I found your blog very informative and insightful. Thank you very much!
I have a question about the “Expense ratio” in mutual funds. If there is a huge portfolio turnover, is the turnover cost included in the expense ratio or that is separate from that? Secondly, I read in several places that huge portfolio turnover increases the unnecessary expense compared to a “Buy and hold” strategy. But if the bottomline performance is good and returns are better (For example DSPBR Top 100), does it matter if the manager churns the portfolio aggressively, unlike funds like Franklin Bluechip?

Reply

206 rajivahuja

Nicely explained.

Reply

207 Nagaraj Chandrasekhara

Hi Hemant,

I had invested 10000Rs. in HDFC Long Term Advantage Fund – Dividend in 2006. I have received few dividends and now the NAV has dropped from 45 to 29. Please let me know when to exit from the mutual fund as I feel this is not the right time to come out of it. Also is it prudent to allocate additional funds into this again to make up for the reduction in NAV? Your advice please…

Thanks and Regards

C.Nagaraj

Reply

208 Hemant Beniwal

Hi Nagarajan,
I appreciate that you understand that this is not right time to withdraw the amount. If possible add more amount to equity MF & sometime in future you will be happy about this decision.

Reply

209 emma

Hello Hemant,

I had a portfolio which comprises of -
HDFC Top 200
HDFC Equity
Reliance Growth
Reliance Gold Fund

(These are through SIP’s) Apart from this I hold Sundaram BNP Paribas Birla Sunlife Frontline Equity Funds. Are these funds good enough?

Also do these funds through SIP’s are tax saver? Which of these have tax benefits ?

Thanks.

Emma

Reply

210 Hemant Beniwal

Hi Emma,
There is no long term capital gain tax on equity mutual funds – no tax if you withdraw your amount after 1 year.

Reply

211 Dhillon

I am again requesting, if someone can answer – What is the difference between Gold ETF Funds and Gold Saving funds?

Reply

212 Hemant Beniwal
213 sumit

Hi Hemant Beniwal,

You are super gr8 financial path man…you explain each and every doubts so clearly like water. I have taken whole day reading this whole page, understanding each and every individuals requirement. I am overwhelmed.

Anyways I am an new investor, after reading all above, i have finalised to invest as SIP for 1000/- each on

1) ICICI Pru focused blue chip (Large cap)
2) HDFC Top 200 (Large and mid cap)
3) HDFC Equity (multi cap)
4) Reliance Gold Fund…do let me know is my portfoilio correct?

Since the current market is down with 20%, should i start investing now for approx 3 yrs.

And I am also planning to invest 50,000 on Baroda Utsav Deposit Scheme with a Rate of Interest: 9.35 % per annum & Period of Deposit : 444 days? Should i go ahead with this.

Since i am non-married with age 25, what type of health insurance & tax is perfect for me.

I dont trust mutual fund agent for their transparency on the fund nor do i have demat account, is their anyway to invest on above listed funds, somebody mentioned fundsindia.com (or any other….pls mention) is it safe to start with.

kindly awaiting for the same.

Thanks

Reply

214 Hemant Beniwal

Hi Sumit,
FD is a good option for this horizon but in case if you are in highest tax bracket – read this
http://www.tflguide.com/2010/03/fixed-deposit-vs-fixed-maturity-plan.html

Reply

215 sumit

Hey Hemant, where are the reply on the above asked doubts (other then FD’s). I was seriously looking out for your reply from a long time. This is not done, hemant. :-( . If you want any more specifications about me, do let me know. I am in 10% bracket tax.

Reply

216 sameer shah

hi hemant,
Thanks a lot for such a lucid way of explaining the basics of financial planning. I am a 31 yr old & the following is my mutual fund portfolio-

1) ICICI Focussed Bluechip Equity Retail
2) Fidelity Equity
3)UTI Dividend Yeild
4) Hdfc Equity
5) IDFC Premier Equity-A

My aim is long term wealth creation. Kindly advise. thanks a lot again

Reply

217 Hemant Beniwal

Hi Sameer,
Your selection looks ok to me.

Reply

218 ravi

Sir
You mentioned as under:
What Documents would be required to apply to these bonds?
If application in made for allotment in physical form, the following documents would be required:
■Indian Passport
■PAN Card issued by Indian Income Tax Department
■Overseas address proof: Such as utility bills, driving license, bank details.
In case of PIO how can Indian Passport be produced? These are U S Citizens. Kindly clarify.

Reply

219 Hemant Beniwal

Hi Ravi,
Please clarify your question – I am not sure you are talking about which question or point.

Reply

220 Amit Kumar

Hi,
Please suggest me a health Insurance policy of 3 Lacs for the family of 4.
My Wife age 30 trs
Me Age 36 yrs
My Kids age 4 yrs and 1 year.
Please suggesy me asap.

Reply

221 Hemant Beniwal

Hi Amit,
You can check Apollo Munich easy health family floater.

Reply

222 Param

Very good information
Hi, i want to know that if i am ready to take some risk ( time horizon – 7-10 years), then those sectors (theme fund) like infra, global opportunities or power which are hammered today, should i start investing in them? like can robeco infra, reliance diversified power, sundaram energy opp, bnp paribas overnight, fidelity international opportunities? I assume that in 7-10 years certainly the time will turn and they will perform better.

Reply

223 Hemant Beniwal

Hi Param,
Check this – Sector Fund Guide
http://www.tflguide.com/2011/05/sector-fund.html

Reply

224 Mahesh Kudva

I started investing Rs 5000 from Nov 11 in different mutual fund by Sip which was done through one of my broker . I am getting transaction charges of Rs 25 every month in all mutual fund. So want to know how can i recover all the charges or can come out of this as this charges being reducing value of investment, can i continue to existing fund but switch to online transaction as there is no charges?

Following are my portfolio:
DSP blackrock top 100- Rs 500
IDFC premier equity fund – Rs 2000
HDFC top 200 growth- Rs 1000
icici pru focused bluechip retail- Rs 1000
Reliance Equity opp fund Rs 500

Kindly advice and thanks in advance

Reply

225 Hemant Beniwal

Hi Mahesh,
It looks that your agent has opted for some small upfront payments from AMCs – talk to him regarding this. Your portfolio looks good so I will suggest you to stick with him as overall guidance is more important in comparison to small charges.

Reply

226 Mahesh kudva

I am investing every month Rs 5k through Sip in various mutual fund from Nov 2011 and was from agent. So every month I am getting charged of Rs 25 as transaction charges which is reflecting in my statement of all mutual fund.

Kindly suggest what should I do as this charges are getting deducted every month and can i withdraw all fund from agent or switch online without discontinuing existing fund.

Reply

227 Hemant Beniwal

Hi Mahesh,
I have already replied to this question on some other post.

Reply

228 Param

Thanks Hemant
1. After reading your advice and many others on TV, I have decided for Rs 30000 pm SIP in following MFs:
ICICI prudential focused blue chip – 5000
HDFC top 200 – 5000
Sundaram select midcap – 2000
IDFC premeir equity – 2000
Reliance Pharma – 1000
Can Robecco Infra – 1000
Reliance diversified Power – 1000
GoldBees gold ETFs – 7000

2. My age- 40 yrs, time horizon – 7 years, Life insurance done, property- I own one flat in noida. EMI 13000pm , govt job
3. please comment on my selection and advice any changes

Reply

229 Param

dear hemant
i’ll request if u can answer the above mentioned question.
thanks
param

Reply

230 Rakesh Sharma

Dear Hemant ,

Please help me to choose SIP’s from following options:

HDFC Top 200.
ICICI Bluechip
ICICI Dynamic
Franklin Bluechip

I can invest 6000 Rupees per month, So please suggest me accordingly how should I go ahead.

Secondaly, I have an idea that I must go as following:

Large cap 60 % , Mid Cap 20 % , Small Cap 20 %.

Please help me to understand & resolve my query so that I can go for a perfect investment.

Regards,
Rakesh Sharma

Reply

231 Hemant Beniwal
232 arindam chakraborty

hi hemant— i am investing in fidelity equity fund,hdfc top200,rel eqty oppor,rel growth,franklin prima fund,icici pru discovery fund since 2005 via S.I.P mode..i need to take out all the money in 2016.as sensex is crumbling what sd i do?can i expect sensex to climb to 21000 in future within 2016 so that i get gd amount on my withdrawal?pls suggest

Reply

233 Hemant Beniwal

Hi Arindam,
I will suggest you to read this
http://www.tflguide.com/2012/05/its-tomorrow-that-matters.html

Reply

234 Ganesh S

I have bought a Bajaj Allainz New Unit Gain Policy (ULIP), my net investment is 60K in 4years (15K x 4) and today the fund value is 43K, i want to know should i still invest further or wait to for NAV increase to a certain level that makes my investment fruitful ?
Pl Note: The surrender value charged for this policy is 29.5% of the first premium.

Can you suggest anything best in this case.

Reply

235 Hemant Beniwal

Hi Ganesh,
If you have shown this policy for tax benefit under section 80 C – surrender value will be taxed if you surrender before 5 years.
If you think you want to withdraw because market is not performing – its not the right time to do it.
But if you think product choice was wrong – you can stop paying the premiums & withdraw the amount at later stage.

Reply

236 Guna

After months of TFL education I finally settled down on a SIP portfolio for child education, house and retirement goals which are 15 years away. My portfolio is given below.

DSP BR Top 100 Rs. 9000 Large cap
UTI Oppurtunities Rs. 9000 Large & mid cap
(or is it multicap)
SBI Emerging business Rs. 9000 Mid & Small cap
HDFC Midcap Opp Rs. 9000 Mid & Small cap
IDFC Premier Equity Plan A Rs. 2000 Mid & Small cap
SBI Dynamic Bond Rs. 2000 (for balancing purpose)
Post Office RD Rs. 2000
Provident Fund Rs. 10,000

As an after thought I realised it is mid and small cap oriented on the equity side. I am likely to get additional Rs. 2000 to spare in near future. My questions are:

(a) Have I learnt anything at all from TFL

(b) Should I increase my subscription to IDFC Premier Equity or should I subscribe that amount to Quantum Long Term Equity to biase the portfolio towards large and mid cap

(c) Should I invest a portion (Rs. 500 or Rs. 1000 ) in gold funds / gold ETFs to complete the portfolio

Reply

237 Hemant Beniwal

Hi Guna,
I think first question you should ask yourself :)
You can think of adding Franklin Bluechip – large cap fund.
For gold – why not try buying gold coins from jeweler – once in a year.

Reply

238 Guna

Hi Hemant,

Thank you for the suggestion. I was comparing Franklin Blue Chip and Quantum Long term

1. It appeared that Quantum Long Term Fund consistently gave much higher annualised returns ( about 15 %) than Franklin Blue Chip (about 9 %). While I understand that past performance is no guarantee in the future, the returns appear to be consistent. Are you suggesting based on my portfolio that I should opt for Large cap Franklin Long term instead of the diversified Quantum Long term fund

2. I was looking at value research figures and was confused about what ‘annualised’ returns are and what ‘yearly’ returns are. While the annualised returns are in the range of 15 %, the yearly returns vary from gain of 100 % to loss of 50 %. The yearly returns for both funds appeared to be similar while there was large variation in the annualised returns

3. The risk grade of quantum long term fund appeared to be below average compared to franklin long term fund.

Regards
Guna

Reply

239 Hemant Beniwal

Hi Guna,
These 2 funds don’t fall in same category – Bluechip is a pure large cap fund but quantum keep adding 20-30% midcap.

Reply

240 nitin

Hi Hemanth,

My monthly investment portfolio in MF is as follows,

HDFC TOP 200 Growth 5000
DSPBR Top 100 Equity Reg 5000
Franklin India Blue Chip 5000
SBI Emerging Fund 5000

Since i do not have any exporsure in Debt funds and Gold ETF i would like to invest in the same. Would it be worth investing in IDFC Premier equity as well.
Kindly suggest me a good Debt Fund and a Gold ETF as well

Regards

Nitin

Reply

241 nitin

nitin
Hi Hemanth,

My monthly investment portfolio in MF is as follows,

HDFC TOP 200 Growth 5000
DSPBR Top 100 Equity Reg 5000
Franklin India Blue Chip 5000
SBI Emerging Fund 5000

Since i do not have any exporsure in Debt funds and Gold ETF i would like to invest in the same. Kindly suggest me a good Debt Fund and a Gold ETF as well

Wanna start investing in the following Funds

IDFC Premier Equity

UTI Oppurtunities

Quantum Long Term Equity

Your views on the same please

Regards

Nitin

Reply

242 Nishi

Hello Hemant,

Thanks for this article.
The article covers the subject completely.
Still I need to ask you : ‘In case I have financial goals set for 20 years from now, then which funds you suggest, I mean should I consider the funds from
Large Cap, Mid & Large Cap or Mid Cap ?’

- HDFC Top 200 is already taken, 2000/mth

Reply

243 Manish

Hi nishi since ur tenure is 20 yrs which is a long term u can consider these funds but before taking any decision read the article ”core and satellite best of both in ur portfolio”.

Reply

244 Nishi

Thanks Manish, although the suggested article clears all the points. still I believe its better to seek advise of a FP before deciding my portfolio.
There are so many large cap and mid cap funds so I am unable to decide which to opt for.
Please guide if I have Rs. 6000 to be invested in equity diversified funds then which funds to opt for ?
I already shared that my time frame for investment would be long, that is 15-20 years.
HDFC Top 200 is Large Cap and I am investing 2000/mth
Is DSP BR Opportunity a good fund ?
Or else which 2 other funds one large cap and one mid cap should be opted ?

Hope you would guide me.

Regards,
Nishi

Reply

245 manish

hi nishi u can also see this article “best mutual fund to invest in 2012″ if u already saw this article then while selecting the fund select one fund from each fund house like u have mentioned one hdfc top 200.in similiar way u can select other funds from each fund house.create ur portfolio and before investing confirm ur funds from hemant sir or anil sir?

Reply

246 Nishi

Yes Manish, I have read this article earlier but then I was not aware of the categories like Large Cap, mid cap…etc
I understand the terms now. So have decided for the following :

Equity Fund:
1) Large Cap : ICICI Prudential Focused Bluechip Equity = 2000
2) Large & Mid Cap : HDFC Top 200 = 2000

Debt Fund :
Please suggest one good fund for this catergory. Amount to be invested is Rs. 1000

Besides above I have PPF which I increased from 2000/mth to 5000/mth. And I am buying gold coins so as to have some money in liquid.

Total investment can be Rs 15 K a month.

Please suggest if the selection is ok.

Reply

247 Manish

Hi nishi yes u selected the right funds. for the beginning its ok to pick the few funds from each category and then slowly u can add few more funds for diversification,regarding debt funds along with ppf u can go for fmp(fixed maturity plan) if u r in a highest tax bracket fmp is better than bank fd,also u can take the advantage of double indexation benefit for more deatails u can read the article fmp vs bank fd.also download the consolidated factsheet from the best mutual fund article.

Reply

248 Nishi

Thanks Manish. But as you suggested in your last comment, I would be feeling better if Hemant / Anil would comment about the selection of funds.

Moreover, regarding FMP – which should be the FMP for a period of 1 year ?

Is double taxation valid till date as it was mentioned in the article FD vs FMP that this was supposed to be revised after April 2011 ?

Shall await your comment.
Thanks.

Reply

249 Nishi

Kindly advise Hemant / Anil Ji……

Reply

250 Avi

Hello,
I have UTI-ULIP(10 years) 90,000 p/y, started this year only; Just want to know whether i should go with it.

Also, i opted following plans this month also:
(1) UTI Opportunities Fund
(2) HDFC Top 200 SIP (2000 p.m.)
(3) Franklin Blue Chip Fund SIP (2000 p.m.)
Please advise if the above mentioned are good options or i should go for other plans, if yes please suggest some better options.
Lookking forward to hear from you.
Thanks in advance.

Avi

Reply

251 Shy

is it sensible to invest in gold this month looking at the falling rupee?

Reply

252 Hemant Beniwal

This month – we have no clue about even this year. Timing prices of asset class is wrong strategy.

Reply

253 Arun

Hi,

I had 3 SIP where the last installments completed last month
HDFC – top 200 (G) – 1k/month
HDFC Equity (G) – 1k/month
BSL front line equity (G) – 1k/month

Is the selection good?Can i re-start the same SIPs with the same scheme again? i am planning to raise my investments to 5k/month.

Kindly suggest.

-Arun

Reply

254 Nishi

Hi Arun,

Although I have no clue about your fund selection, but I believe you can increase the SIP amount in the same funds if you want to increase the investment amount in Mutual funds. There is no need to start a new SIP for this. You can check for this option when next month SIP will be due.

Regarding your fund selection, Hemant / Anil ji should be able to guide you.

Reply

255 Saty

Hello Hemant,
I have one doubt..
Suppose while investing in mutual fund, i have long term goal, say 15-20 years.

If i do profit booking, i may loose benfits of compounding. or if i dont do the same, it may happen that when I want money in 10-15 years time frame I may have to redeem in a phase where the markets can be down thus fetching me low returns.

So my question is
shall i do profit booking in Mutual fund, when our mutual fund reaches to that profit %…or stay invested for 15-20 years.?

Reply

256 Vikas

Hi saty,

The strategy of profit booking rest on your goals. If you do not need immediate money then even the profits will have to be invested for wealth accumulation. Power of compounding works very well for long term investment and so investing for the period will be appropriate option.

Reply

257 nitin

sir,

can u plz tell me abt my portfolio ? is it fine or need some changes?

HDFC eqity fund growth-2000pm sip

RELIANCE growth fund growth plan 1500pm sip

ICICI pru focused blue chip equity fund 3500pm sip

ICICI pru infra fund 300pm sip

kotak gold fund 1000pm sip

i m giving 10-15 years time & do not invest in stocks directly.

thanks

Reply

258 Vikas

Hi Nitin,

Read this to understand what kind of portfolio you should have

http://www.tflguide.com/2011/12/core-satellite-fund-portfolio-investment-approach.html

You can look at reviewing infra fund from your portfolio.

Reply

259 Prashant

Hello I am new to this SIP.
I have saving of INR 10000 pm from my current salary, so shoud i have SIP?
Kindly suggest to have good portfolio.
Also one question that suppose after 1/2 yr i would like to discontinue the SIPs then what will happen? all invested amount will be lost or will be something else?

Reply

260 Vikas

Hi Prashant,

SIP or systematic plans works well if you align it with your long term goals. If you have quantified your goals then you will have clarity on the amount of savings required to reach them. For creating a good portfolio you should read this

http://www.tflguide.com/2011/12/core-satellite-fund-portfolio-investment-approach.html

If you discontinue your money will remain invested in the schemes and earn returns as per performance of the market.But good to avoid such strategy.

Reply

261 Manju

Respected Hemantji
I am 45yr old and in govt service I alredy invest in these fund through sip
1.Rs 2000/ in HDFC TOP 200.
2.Rs.1000/ in HDFC MID CAP OPP.FUND
3.Rs.1000/ in ICICI PRU FOCUSED BLUCHIP EQUITY FUND
4.Rs.1000/ in TATA DIVIDEND YIELD FUND
5.Rs.1000/ in TATA EQUITY P/E FUND
I want to discontinued in Tata dividend yield fund and tata equity p/e fund and start sip in RELIANCE EQUITY OPPORTUNITIES FUND Rs. 2000/ and rs 500 in Reliance gold saving fund. Pl. comment on my portfolio and give me any other advise my time horizen is 10 to 15 year when I will retire from service.
Thanks

Reply

262 Vikas

Hi Manju,

Mutual Funds have different categories like large cap, multicap, mid cap,balanced and long term debt. A diversified portfolio is created when you choose among these and avoid repeating too many funds from the same category.
Review your portfolio keeping this objective. You can also read on ho wt create an investment portfolio here-

http://www.tflguide.com/2011/12/core-satellite-fund-portfolio-investment-approach.html

Reply

263 Harish

Hi
My query is regarding performance of equity fund. If an equity is not performing well and it is not giving more return than other equity fund what may be the reason and what steps can a fund manager should take to improve his returns?

Reply

264 Vikas

Hi Harish,

There can be different reasons for fund underperformance. Wrong calls by fund manager, underperformance from some sectors, economic scenario etc. The fund manager act as per the situation and mandated investment objective of the scheme.

Reply

265 sandeep thakur

Hi,
My question is i have bought three sip of SBI magnum tax gain- Dividend , ICICI prudential tax plan- Dividend and SUNDARAM tax saver – Dividend.
on May for Rs 1000 respectively.
Now how can i found the status of all the three funds.
They send me statement every month but it has written Amount, Nav, Price and units.
how can i calculate the value of my fund.

Reply

266 Hemant Beniwal

Hi Sandeep,
Just multiply your units with current NAV.

Reply

267 chintan

Hi Hemant,

I hold fixed income debt plan(Growth option) from religare, if i switch to dividend(Reinvestment) option (Under same plan) for tax benefits, will my returns change?

Reply

268 Vikas

Hi Chintan,

Since the taxation varies in growth and dividend option it can produce some difference. Also, with change in Dividend Distribution Tax, growth option will be more beneficial.

Reply

269 santhosh

Is my portfolio well diversified? please suggest.
HDFC BALANCED 2000
DSPBR TOP 100 EQUITY 2000
QUANTUM LONGTERM EQ 1000
ICICIP DISCOVERY 1000.

Purpose of portfolio: Longterm wealth creation.
duration: more than 15 years.. aged 28yrs.

Reply

270 Vikas

Hi Santosh,

Your portfolio is good enough for the objective you have highlighted. For more clarity on portfolio creation strategy you can read this

http://www.tflguide.com/2011/12/core-satellite-fund-portfolio-investment-approach.html

Reply

271 Trups

Hi, I,m interested in SBI GOLD GROWTH fof.. I want to invest 20000 as a one time and Sip of two thousand for three year. Im newbi never invested befor in MF. Shall go ahead or wait to get marke stable.

thanks.

Reply

272 Vikas

Hi Trups,

Before investing in Mutual funds its important to understand the categories available and how risk return characteristics vary. Thsi will help you to choose the right scheme which can meet your goal. A gold ETF is a better proposition then Gold FOF due to lower charges. Also, if you have to withdraw the corpus after three year then its wiser not to aim for higher returns and choose a category which is not highly volatile. Look at avenues from debt mutual funds with this time horizon.

Reply

273 NARESH DESAI

I WANT TO KNOW FROM WHERE CAN I FIND NAV OF LAUNCH DATE ?, I WANRT TO KNOW SINCE CURRENT NAV OF TWO FUNDS IS Rs.221 & Rs. 27 RESPECTIVELY ALTHOUGH BOTH FUNDS WERE LAUNCHED IN SAME YEAR 1995. & ALSO NAV OF ONE FUND IS QUOTING Rs. 1601.

Reply

274 Vikas

Hi Naresh,

You can get most of the information in the factsheet which you can download from the respective company website.

Reply

275 B. VIJAY

Sir,

thank you for this good information.

Please inform me if i invest Rs 1000 as sip how much will be invested by buying the units and how much will be taken as commission and annual charges

Reply

276 Vikas

Hi Vijay,

The entire sum will be invested since the commissions are not deducted from investors money anymore.

You can get the information on expenses in respective companies fact sheet which you can download from their website.

Reply

277 virendra singh

Hi Hemant
I transact HDFC MF online. After switching units of one MF to another MF I cannot redeem the switched-in units for many days as they are not shown as “free”/”available” for redemption. Only when they appear as free after many days I can redeem them . Why is this delay in showing the units as free to redeem? Is it some rule common to all MF providers? Thanks.

Virendra

Reply

278 Phani Kumar

Hi,
I have invested for a period of three years for Reliance Growth Fund (with dividend option as reinvestment) , Reliance Vision Fund (with dividend option as reinvestment) and in the month of July I stopped investing in it, but I did not yet redeem it. Recently , I could see that the funds have raised for sometime and slowly they are coming down. I am not sure, if I can hold in it for some time or redeem, my intention was to make a partial payment of housing loan which I had taken, this makes me to think again. Please provide help in this regard.
Regards,
Phani

Reply

279 Vikas

Hi Phani,

If the objective was to repay your home loan then you should have moved out from the funds earlier due to the risk you are facing now and should have kept money in a liquid account. Nevertheless, you should repay your liability if its not in manageable limits.

Reply

280 gopal

Hi,

I have started investing in HDFC 200 as in sip for 20 yrs and now i want to increase the time period to 30 years. how ? suggest me plz.
2. Now i want to start new sips which are good for 30 years

rgds
gopal

Reply

281 Vikas

Hi Gopal,

You can renew your SIP whenever the terms ends.

For choosing a SIP read this-

http://www.tflguide.com/2013/01/best-mutual-funds-to-invest-in-2013-india-top-schemes.html

Reply

282 shrikant m

Hi hemant sir,

I am 25 & just secured my life wid term insurance,now want to do investment to earn good returns,,kindly suggest me investment planning one should do to live comfortable life like in mutual fund & its duration, & any other plans like pension,RD,etc. Thanks for excellent article.

Reply

283 Vikas

Hi Shrikant,

Good to hear that you have started thinking about your future at right stage.

Read these to know about investing-

http://www.tflguide.com/2010/12/investment-young-people.html
http://www.tflguide.com/2010/10/do-you-really-understand-sip.html

Reply

284 ashish jain

hi
I invested Rrs 10000/rs in 2008 on 174.50 nav in principle tax saver mf till the date that fund is struggling to get that height of nave this fund is constantly performing bad now please tell me what should i do with this shall I sell it in loss because I don’t think their is any point to hold it if yes for sell please recommend any best fund ,I don’t want any other elss now ..

thanks and regards
ashish jain

Reply

285 Vikas

Hi Ashish,

Selling a fund is a decision which you should take after evaluating the scheme by Comparing it across others and the ELSS category. This will help you in knowing the reason for underperformance .

For selecting an appropriate MF scheme you can read this

http://www.tflguide.com/2013/01/best-mutual-funds-to-invest-in-2013-india-top-schemes.html

Reply

286 ashish jain

thanks Vikas thank u very much …

Reply

287 PRAVEEN KUMAR

SIR,
MY SELF STARTED SIP’S FOR THE LAST 6 MONTHS WITH A TIME HORIZON OF 10 YEARS + 2500 EACH
1.ICICI FOC BLUE CHIP
2.HDFC TOP 200
3.QUANTUM LONG TERM EQUITY
4.IDFC PREMIER EQUITY

IF ANY CHANGES ARE REQUIRED PLEASE SUGGEST

Reply

288 Vikas
289 kamlesh pandey

Hi Hemant Sir,
my age is 35 years & i want to start investing in MF for long term around 15 years & my strategy is to add around 6 funds into my portfolio through sip 500 per month for each fund, my fund choice is as below
1. hdfc top 200 or hdfc equity
2. dsp blackrock equity or dsp blackrock top 100 equity
3. icici pru focused blue chip or frenklin templeton frenklin india blue chip
4. reliance regular saving equity or reliance equity opportunities
5. uti opportunities
6. idfc premier equity

is my portfolio & strategy is right ?
what do you suggest sir ? please reply …………

Reply

290 Vikas

Hi Kamlesh,

Read this which will help you in taking a decision for your investments-

http://www.tflguide.com/2011/12/core-satellite-fund-portfolio-investment-approach.html

About schemes to invest you can read this-

http://www.tflguide.com/2013/01/best-mutual-funds-to-invest-in-2013-india-top-schemes.html

Reply

291 Mahesh Godbole

Dear Sir,
I want to invest in Quantum long Term Equity Fund SIP. Is that good for me? Or invest in another. I alrady invested in DSP blackrock top 1oo Equity,HDFC Equity,ICICI prudencial Focused Bluechip Equity.

Reply

292 Vikas
293 ashwin inamdar

Hi hemant,

You have posted the nice document.

I have one question regarding DEBT funds.

Are there any TAX SAVING debt funds like in equity there is ELSS?

Reply

294 Vikas

Hi Ashwin,

There si no tax saving scheme from Debt Mutual Funds.

Reply

295 Md.Shakil

Hi Hemant,

Thanks for such a nice article. I got too many answer from the article.
I have shared this with all my close friends.

Reply

296 Mrs P

I want some clarification regarding liquid funds. It seems that it gives about 9%+ returns. an parking money in there for about 1+ years time will consider as long term investment in terms of taxation.

Now my question is that suppose i invested rs 1,00,000 (Rs. 10 NAV) and i know that after 1 year 1day, i would get 1,09,000 (assuming 9% interest)… I have also heard about Dividend Distribution Tax to be about 27.xx% incase of liquid funds.. so my question here is that… does the latest NAV value on the websites reflect the deducted taxx amount ? or during withdrawal , i will get less than 1,09,000.. ??

in other words… Whatever the NAV value is, thats the EXACT value i will be able to withdraw right ? Or any deeductions/….. I am only considering 1+years of investment… Please advice..

I am planning to park my surplus funds in there which has been sitting in my bank at 4% interest, also the income will have a benefit of indexation during taxation, and i am already under a higher tax bracket…..

I already have investments in Equities , but i would also like some VERY LITTLE RISK, liquidity option for my surplus amount in saving bank account… in short, i would like to use the liquid funds as my saving bank account.. please suggest…

Reply

297 Vikas

Mrs P,

Investment in Debt Mutual Funds for more than one year is long term and so Long Term Capital Gains Taxation is applicable.
The NAV of dividend option on a particular day will be post the dividend declaration.When you redeem your money then you receive the valuation as per respective day NAV. If you have opted for dividend payout then you would have received your dividends as they are declared after deducting DDT. In case you opted for reinvestment then the dividend after DDT are reinvested in the scheme where you earn capital gains. Now, based on when these dividends are reinvested the short term or long term capital gains tax will be applicable on these units.
Yes if the investments completes one year and there are capital gains, you can claim indexation benefit.
Read this to know about the funds-

http://www.tflguide.com/2013/01/best-mutual-funds-to-invest-in-2013-india-top-schemes.html

Reply

298 Mrs. P

Thanks Vikas for the clarification.

As per my understand based on your explainination, i think it is safe to assume that the %age returns that are posted on the respected websites like 1yr, 2yr, 3yr cagr are all after deducting the DDT. .. and the DDT is not applicable on Long-Term LIquid Funds..

Thanks for the reply.

Reply

299 Vikas

Mrs.P,

The returns posted on the websites are for two options-Growth and Dividend.
The taxation will not factor in growth cause that’s respective to an individual liability and paid by them only. The dividend option will have taken the dividend declared into consideration since the NAV drops after that by the same amount.
DDT is applicable wherever there is dividend declaration in debt funds be it short term or long term.If you are investing for more than one year then you can take a growth option where indexation benefit will be available on the gains you will make which will reduce your tax liability.

Reply

300 Mrs. P

Thanks a lot Vikas. You have clarified my confusion.

I must appreciate your time and efforts to reply to everyone :)

There are very few people now a days who want to help others genuinely without and self-motive.

Thanks once again, and i hope a lot of success for you and this forum.

Reply

301 Vikas

Thanks Mrs.P

We are glad that your doubts have been cleared.

Reply

302 Dr Yogesh

when we invest in different funds, do we need to pay annual maintenance charges to each fund manager. I’m bit confused.

Reply

303 Vikas

Dr.Yogesh,

Charges like fund management are deducted by each Mutual Fund Company. However the method of deduction is based on the total corpus.But there have been recent changes where some of these charges have been increased for investors.

Read this :
http://www.tflguide.com/2012/09/how-mutual-fund-reforms-will-affect-you-infographics.html

Reply

304 Asif Shaikh

Dear Hemant,

Very nice opinion on mutual funds – GREAT.
How about your kind concern on shariah compliant shares.
It would be great if your kind suggestion on fmcg,pharma
and other shares is being provided.

Regards.

Reply

305 Vikas

Hi Asif,

TFLGuide do not track direct equities and so won’t be able to comment on your query.

Reply

306 Sujash Bera

Hi
The article seems a really nice and informative one for someone like me.

To be precise I am supposed to begin my mutual fund investments from next month.
I am 30 and I have chosen two plans in SIP
1. SBI Dynamic Bond Fund for 5 years (2000 monthly)
2. SBI Emerging Business Fund for 7-8 years (2000 monthly)

Are these two can act as a basic choice for a beginner like me?

Reply

307 Vikas

Hi Sujash,

You should consider a balanced fund which has a mix of equity and debt. For beginners these are ideal funds to start with and once aware you can look at creating an investment portfolio from different categories.

Read below

http://www.tflguide.com/2012/03/best-balanced-mutual-funds.html

Reply

308 Sunit Singhal

Dear Sir,
I am investing Rs. 1500/- from last one & half years in HDFC Top 200 & ICICI FOCUSED BLUE CHIP both funds & want to invest Rs. 1000/- in ELSS fund. so pls suggest me best ELSS fund for create my corpus.

Regards,

SUNIT SINGHAL

Reply

309 Vikas

Hi Sunit,

Read the below article which will answer your query

http://www.tflguide.com/2013/01/best-tax-saving-mutual-fund.html

Reply

310 Jatin

Hi Hemant,

I am salaried person and new in market as a investor in MF through SIP.

I would like to invest 6000 per month in MF through SIP.

Hence, could you please suggest me on few below questions.

1) In Which MFs shall i have to invest and how much?
2) Which period shall i have to opt for good return 5yrs / 10yrs or… ?
3) Can i withraw or stop SIP in future for any reason? if yes then when (means after how many years )?
4) Can i increase SIP investment amount in future for the running SIP or i have to buy new one?
5) Which is the better one? Equity? Debt? Balanced? or etc.

Kindly advice.

Thanks,
Jatin

Reply

311 Vikas
312 Ayyappa Das

Dear sir,

I am 30 years old employed person , i would like to invest 2000 per month in Mutual fund (SIP), for 20 years, could you please suggest me which plan is good.
also after 20 years how much can i expect..
please reply.

Reply

313 subhajit

Dear sir,

I have recently started a SIP in ICICI pru Balanced Advantage Fund of Rs. 4000/-
I got account statement where I found that they are charging Rs.25 every month as transaction charge. SIP purchasing value is 3975/- I have other SIP’s also like HDFC, Birla Sunlife, DSP etc. but they do not charge anything. Why ICICI charging?

Reply

314 Krishna kiriti

If u invest through a distributor, u will be charged a total amount of 100rs.. It’s divided into 25rs per month for four months. That is why u can see a deduction of 25rs per month for ur SIP.

Reply

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