I have an annual gross salary of Rs 8.6 lakh. I have done extensive tax saving for the year. But I need to invest another Rs 12,000 for this. Should I invest in infrastructure bonds?
My investments are in three LIC policies – one ulip from Bajaj Allianz and SIPs in three tax-saving funds. These include Fidelity Tax Advantage, Sundaram BNP Paribas Taxsaver and Quantum Tax Saving Fund.
– Atul Sarma
Your fund selection in terms of equity-linked savings schemes (ELSS) is good. We are not sure about infrastructure bonds, as there are few areas of concern.
First, These bonds will be of 10-year tenure, at the least. Do you want to block your money for that long? However, the minimum lock-in period is limited to five years and the investor can exit either through the secondary market or through a buyback facility (bond issuer determines the actual exit mode).
Second, they are not to be compulsorily rated. So, besides institutions like Life Insurance Corporation of India, IDFC and Industrial Finance Corporation of India, other institutions will hop on. Regulations permit any non-banking financial companies, which are classified as infrastructure finance companies by the Reserve Bank of India, to issue such bonds.
Third, the returns may not be too impressive, since the ceiling is to match yields with government securities (G-Secs).
I invest Rs 1,000 each month in each – Religare Tax Plan, HDFC Top 200, HDFC Tax Saver and ICICI Prudential Tax Plan. Should I continue or redeem and put it in another fund?
I also want to invest Rs 3,000 more each month via SIPs. Should I distribute it between two or three funds?
I need to invest some money for a 3-month tenure. Is HDFC Top 200 a good choice?
– Neha Parmar
There are a number of issues you have brought up. First, let’s talk about your tax-saving funds. If you are investing Rs 4,000 each month in an ELSS, why are you going with four funds? In fact, you invest in two funds from the same fund house – HDFC mutual fund. You could have distributed your investment in just two funds, if you were reluctant to go with just one.
You want to know if you should redeem your units and put it in another fund. You must realise that investments in tax-saving funds have a three-year lock-in period.
You ask if HDFC Top 200 is a good choice for around three months. It is not. For such a short time frame, you cannot consider any equity product. Equity must have a time frame of at least three years.
Since you already have four ELSS, don’t go overboard with other equity diversified funds. Stick to either one or two. If you go with one fund, pick it from the large- and mid-cap category. If you go with two, opt for one from the large-cap category and the other from the mid-cap category.
Here’s our recommendation: for investing Rs 3,000 in just one fund, you can look at Fidelity Equity or Canara Robeco Equity Diversified.
If you are spreading the investments in two funds, that is SIP of Rs 1,500 each, look at DSPBR Top 100 Equity, Franklin India Bluechip, IDFC Premier Equity Plan A or Reliance Growth Mid Cap
I am 27 and I invest via SIPs in DSPBR Small and Mid Cap, Reliance Growth and ICICI Discovery. Now I want to invest in some good large cap funds. Please suggest.
– Akhilendra Pratap Singh
In the large-cap funds category, some good picks include DSPBR Top 100 Equity, DWS Alpha Equity Regular, IDFC Imperial Equity Plan A and Franklin India Bluechip.
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