I am a 45-year-old banker. I had been investing in six equity schemes (growth options) through monthly systematic investment plans (SIPs) for the past three years. The approximate investment was Rs 2.38 lakh. Yesterday, I redeemed all my units, as I was quite happy with the approximate annualised returns, of between 15-20 per cent, and also as I felt the market was running at a brisker pace than warranted. The approximate maturity proceeds will be Rs 3.45 lakh.
2. Rs 1.00 lakh in HDFC Prudence Fund (Growth)
3. Rs 0.50 lakh in DSP BlackRock Balanced Fund(Growth)
4. Rs 0.50 lakh in FT India Balanced Fund(Growth)
Apart from this, I intend to invest Rs 5,000 each through monthly SIP mode in the following four schemes from November 2009:
1. HDFC Top 200(Growth)
2. ICICI Infrastructure(Growth)
3. Reliance RSF(Equity) (Growth)
4. DSP BlackRock World Gold Fund (Growth)
I seek your advice on the following:
Your views on my selection of schemes for SIP from November -
Sudhakar Narayan Mestri
Since all your investments are in equity funds, you do not have to pay any tax on the investments more than one year old. But for investments done within a year, you will have to pay tax at the rate of 15 per cent (plus surcharge and cess) on the gains. We totally disagree with the way you have redeemed your portfolio. What you have done to lock-in your investment could have been achieved if you have maintained a balanced portfolio with debt and equity. Then re-balancing would have taken care of this booking of profits.
Regarding your next query relating to reinvestment plans, your selection of funds is quite impressive, as all of them are either 4-star or 5-star rated. But it would be prudent if you go via SIP in balanced funds, too.
Your current portfolio in all circumstances would be able to give adequate returns and you can certainly do without investing in a DSPBR World Gold Fund, a speciality fund tracking gold stocks.
On the bank FD, you might consider a debt fund, as it is more tax-efficient and liquid compared to the former. But before doing so, decide on the debt/equity allocation and rebalance your portfolio regularly to maintain that balance.
Since 2007, I have regularly invested in diversified equity or pure large-cap funds. Given the steep market run-up in the past eight months, I intend to switch approximately 10-15 per cent of my current corpus to liquid plus funds. I plan to re-invest this later in the event of a significant market correction. Can you suggest some names?
-Santosh Nagarkar
Since you wish to shift from equity funds to debt-liquid plus funds, you may consider investing in any one of the following liquid plus funds - JM Money Manager Super or Principal Ultra Short Term.
I have invested about Rs 55,000 in JM Contra Growth in late 2007. The current fund value is some Rs 38,000. What should I do now? Should I exit or remain invested?
-Sushil Parasharan
Since launch (August 2007), the fund has given a minus 22.98 per cent annualised return. Considering its consistent underperformance, you should exit this fund in favour of 4- or 5-star rated funds with adequate history.
Value Research
I intend to re-invest these proceeds in the following manner:
1. Rs 1.45 lakh in bank deposit
