-Shashank
Interest rates have certainly not peaked. As rates go up, prices will fall and yields will go up. Since you are willing to tolerate a little bit of risk, you can consider an MIP. The 3-year return of this category was 7.71 per cent, as on September 14.
However, do note the economy is in a sort of flux, where short-term rates will rise over the next six months. But if the opinion is that inflation could come under control, then long-term rates could start falling. This is known as curve flattening.
HDFC MIP Long Term, HSBC MIP Savings, Reliance MIP and Canara Robeco MIP are four funds you can look at. There is no scope for negotiating with the fund on lower expenses irrespective of the amount.
For the purpose of tax planning, I invested Rs 75,000 in tax-saving mutual funds via a Systematic Investment Plan (SIP). I would like some secured investment for the remaining Rs 25,000. Suggest me some options.
-Anshul
To avail of the tax deduction under Section 80C, equity-linked savings schemes (ELSS) are one of the best options. However, they are market-related investments and hence involve risk. The other options one can choose from include National Savings Certificate (NSC), Public Provident Fund (PPF) and 5-year bank fixed deposits. While all give you an assured return, 5-year fixed deposits score highest in terms of the lowest lock-in period.
I am 46 and want to retire at 56. I am investing Rs 40,000 in the five mutual funds mentioned below through SIP. My objective is to create a wealth of Rs 1.5 crore in the next 10 years for my retirement. I can invest up to Rs 75,000 per month.
I have Rs 11 lakh in PPF. I own my house and have no liability that has to be fulfiled from this particular wealth creation. Will I be able to meet my objective?
Scheme Investment/ month (Rs) DSPBR Top 100 Equity 10,000 Reliance Regular Savings Equity 9,000 HDFC Prudence 8,000 BSL Dividend Yield 7,000 HDFC Top 200 6,000
-Kumar
Assuming your equity investments earn an annual return of 12 per cent, your present monthly investment of Rs 40,000 will allow you to accumulate only Rs 92.9 lakh in 10 years. However, if you invest Rs 75,000 a month, you will be able to accumulate a corpus of Rs 1.7 crore in the same time frame, which is what you desire.
If you look at your overall investments, we see that your exposure to mid- and small-cap stocks is around 37 per cent, while large-cap is 58 per cent. Your funds selection is good but we do think you should increase your large-cap exposure, while limiting your mid- and small-cap exposure to less than 30 per cent.
| Scheme | 3-yr return (%) | 5-yr return (%) |
| DSPBR Top 100 Equity | 14.44 | 24.97 |
| IDFC Imperial Equity Plan A | 13.98 | - |
| Franklin India Bluechip | 13.38 | 22.18 |
| Reliance Regular Savings Equity | 21.77 | 26.97 |
| HDFC Top 200 | 19.31 | 26.78 |
| HDFC Prudence | 18.62 | 23.31 |
If you exit your mid-and small-cap fund, BSL Dividend Yield Plus, your large-cap exposure would account to 68 per cent and the mid-cap would get reduced to 28 per cent. Instead, choose a large-cap fund like IDFC Imperial Equity Plan A or Franklin India Bluechip. Invest an additional Rs 35,000 in the suggested five funds.
Value Research
I have sold some long-term equity holdings and would like to invest the proceeds to get a regular monthly income. I am willing to tolerate a little bit of risk. Considering that rates are about to rise and yields about to fall, would it be wise to invest in Monthly Income Plans (MIPs) or debt funds? I am looking at a minimum holding period of 2-3 years, after which I may consider switching to equity.
If the sum invested is large, is there any scope for negotiating with the fund for lower expenses, and other charges?
