Have a nominee for investments

Is it important to have a nominee when investing in mutual funds? I want to change the nomination to my wife’s name, can it be done?

- Hemal Shah

Nomination is important and you should ensure you have nominated a person who will be entrusted with your money in case of your death. Without a nomination, if you die, it will be cumbersome for your legal heirs to take control of your investments. By having a nominee, the amount gets transferred directly to him/her in the event of your death and the process is fairly simple, with nominee having to prove identity. You can change the nominee as many times as you wish, by filling the relevant form and changing the nominee.

I have been investing in equity-linked savings schemes (ELSS) since 2006. With the Direct Taxes Code likely by 2012, should I continue with ELSS? I don't have any other equity investments.

- Rajesh Garg

If you have no other equity investments, investments in ELSS is the best way to have it. These qualify for tax deduction and also offer diversification. In the DTC regime, ELSS does not fall within the list of investments that qualify for tax deductions. You will get the necessary tax break if you continue to invest in these funds in 2011-12.

I have a unit-linked insurance product (Ulip) that I bought eight years back and pay Rs 25,000 as yearly premium. I am not happy with the returns. Should I close it? What alternatives do I have?

- Jasmeet Singh Narang

If investment returns is the criteria, Ulips are a bad product. It is a combination of insurance and investment. It is tough for such products to be fair to both the distinct needs. As you have been an investor for eight years, you would have crossed the necessary lock-in and paid-up phase. Check the value of your investment with your insurer to decide on discontinuing. For equity investments, you can invest in mutual funds or directly in stocks. This is a good way to get equity exposure and diversity. Invest through systematic investment plans (SIPs) and your money will grow into a sizeable corpus over time.

I invested in Fidelity Equity in January 2008. The returns have not been impressive. Should I continue with it?

- Debashish Roy

Your fund choice is good. Fidelity Equity is a 5-star rated fund, falls in the large- and mid-cap space and should form the core component of your portfolio. The performance of this fund has been good and you can consider continuing investing in it. But, mutual fund investments is best when done systematically and regularly. This takes care of the ups and downs in market and averages the long-term performance. It also allows you to track the fund performance and make necessary changes.

I want to save Rs 10,000 a month for the next 15 years for my month-old daughter. What debt-equity allocation should I follow and what funds should I invest in? I am already invested in mutual funds for my future.

- Deepak Gupta

Investing for the long-term is a good idea through mutual funds, if done regularly. With the time frame in mind, you can be an aggressive investor and consider an 80:20 equity-debt allocation. You can invest Rs 10,000 across two to three schemes that have a large-cap and large- and mid-cap exposure, such as HDFC Top 200 Growth, DSP Blackrock Top 100 Growth, IDFC Imperial Equity and Franklin India Bluechip. Opt for the growth option in these schemes. And, make sure you track the performance of these funds at least once a year and make any necessary changes to your holdings.

Value Research