PROFILE
I am 30 years old, single and work as a flight purser in an international airline. My monthly salary averages Rs 1.2-1.4 lakh a month.
AIMS
I plan to buy a house in the near future at a cost of Rs 60 lakh.I have already saved about Rs 22 lakh. I will take a home loan for the balance.
I also plan to invest in an additional house that I will jointly own with my father. It will also ensure a fixed rental income in the future.
I would like to take a term life insurance plan, but am unsure of the amount. However, I do not think I should take a cover against my home loan.
My health insurance is currently taken care of by my employer. Though, where my parents are concerned, I have taken health insurance policies of Rs 1.5 lakh for each of them.
ISSUES
Medical Insurance
It is wise to also have your own medical insurance. For every claim-free year that you have, some insurance companies decrease the premium or increase the cover. So, there are benefits of taking a policy in your very own name.
Life Insurance
Insure yourself for an amount which, when invested at a particular rate of interest (take a bank deposit rate), will give them the return they need to live on. Based on an assumption that expenses are 40-50 per cent of your income, and a cover with a tenure of 15 years, you should get covered for Rs 1 crore.
Home Loan Insurance
Opt for a decreasing term plan where the sum assured, and hence the cost, keeps falling as the outstanding loan gets reduced.
SIP
The fact that you invested in January 2008 shows you got carried away with the market sentiment. You also picked the top performing funds at that time. In the future, stick to investing regularly and consistently in funds with a proven historic record. Investing through a systematic investment plan prevents investment losses, since the investment averages out during market highs and lows. You end up buying more units when cheap, and less when expensive.
THEMATIC FUNDS
Current position: Though you are young with few liabilities, it is not wise to be so concentrated on specific sectors. Restrict the exposure to such funds to 20 per cent from the 60 per cent that you have now.
Suggested action: Sell JM Basic and JM Financial Services Sector. You now are left with an exposure to a banking sector fund, a power sector fund and two funds with a focus on infrastructure.
TAX SAVING FUNDS
Current position: Currently, you own Magnum Taxgain and Fidelity Tax Advantage.
Suggested action: Both are good funds. Stick with these.
DEBT FUND
Current position: NIL
Suggested action: You must have some amount of debt exposure to provide stability to your overall portfolio, as well as help in rebalancing. Where the latter is concerned, you should arrive at an asset allocation figure. So, should you decide to invest around 80 per cent of your assets in equity, allocate the balance 20 per cent to debt. And rebalance your portfolio once a year to maintain that ratio.
If you do not want a pure debt fund, consider a balanced fund -- Canara Robeco Balanced, DSPBR Balanced and Magnum Balanced.
CORE FUNDS
Suggested sction: Both the tax saving funds can double up as core funds, so continue investing in these. However, Reliance Regular Savings Equity is also a good fund, so you can consider increasing your investment in it.
