Am I on the right path?

POSTED BY sha faisal ON January 2, 2013 8:44 pm COMMENTS (7)


I do have 2 queries.

I have a surplus of 50k which I am planning to invest for next 2 years.  

Risk Factor: Medium

 I am planning to park 25k in either of HDFC Midcap opportunities Fund or SBI Emerging Business Fund. And the other 25k in banking funds like Reliance Banking Fund or ICICI Pru Banking and Financial Services. But strangely I found that both these Banking funds are not rated by CRISIL.

Do you feel the above mentioned options are good enough to move ahead or any changes should be made to them?


Secondly, my father is a retired Govt. Employee who draws a pension of 27k per month aged 65 yrs. He has to pay tax for Rs.75k approx as 2.5lakh is tax relaxation limit for senior Citizens. Tax comes to around Rs.7800. Calculated with the help of

Is the calculation right( I am not very sure) and if so he wanted to invest some amount in tax plans to avoid taxpaying. No to PPF or NSC Bonds.

Can he go ahead with ICICI , Canara Robecco or Reliance Tax Saver as locking period is 3 years, and if so how much amount he needs to invest in order to pay no Tax?


Awaiting Replies.


Many Thanks,



7 replies on this article “Am I on the right path?”

  1. Ashal has clearly said stay away from equity. If you are going invest in mid-caps and banking funds the best for you to do is to assume that portion of investment is not available after 2 years at all!

    Risk taking for such a short duration is a very bad idea.

  2. sha faisal says:

    Thanks everyone for your inputs.

    @ Ashal and FCC:

    If I had to choose one between Midcap Equities and Banking funds which one would you suggest for the same period of 2 years? Rather than keeping entire 50k in MIP’s I am thinking of 25k in either of Midcap or Bankings and another 25k in MIP’s. I feel to take risk for atleast 25k?

    Will that be a wise decision to make?

    Thanks in Advance


    1. Ramesh says:

      Why not keep 25k in debt funds, 12.5k in Banking and 12.5k in Midcap fund. You get to choose all of them and you will not miss out.

      Whether this is a wise decision or not, is only your call to make? enough has already been said by others in that matter.

      It is your money, and you and you alone are responsible for it.

  3. Think for Bank Tax saver deposits as tax liability on income looking nil.

    IDBI – 9.75%.

    Lock in 5 years.
    but one can take interest payouts Quarterly,half yearly or annually.

  4. Sanjay says:

    1. Your father can save Rs 7600 Tax as below.
    If you have exhausted your Sec 80 C limit of Rs 1L before making your Life Insurance payment, then your father can Pay the LIC premium & can claim that U/S 80C where in a Parent can pay & claim rebate for his/her Children Life.

  5. Dear Sha Faisal, as you need the money in just 2Y time frame, please do not invest at all in Eq. fund. you may burn your fingers. Even if you want to get a tint of Eq. in your investment. My take ‘ll be HDFC MIP LTP it ‘ll give you 25% exposure in Eq. & remaining in Debt.

    Regarding Father, 27K mly translates into yly income of 3.24L Rs.

    Being a Sr. citizen, the zero tax limit for your father is 2.5L Rs. Hence taxable income is 74000 Rs. only & @ 10.3% slab rate, the tax outgo is 7800 Rs. that’s correct.

    to save on this tax outgo, your father can invest in the way as dear FFC (Free Financial Calculators) has suggested.



  6. You have chosen extremely volatile funds if you want the money in two years and your risk profile is medium you should park about 10-20% money in large cap mutual funds like Franklin India Blue Chip and avoid mid-cap and banking funds altogether!

    Risk profile is actually irrelevant for such short periods as no one can predict how small or mid cap funds will behave next year. Dont get swayed by 2012 returns.

    Rest of the money can be spread across income funds and fixed maturity plans for tax efficiency.

    You father needs to save 74000 to pay no tax if he can afford to save this much (yes you are right in the calculation)

    He can first get himself a good mediclaim policy with a large cover for Rs. 20,000
    rest of the money can be put in ELSS mf over 3 months (the funds you listed are good).
    However the lock-in is 3 years so you need to ensure he doesn’t not need the money.
    So ensure he has enough money for emergencies (all kinds).
    Saving tax is important but we need to ensure we can live comfortably and take care of emergencies while we take care of tax liability. So think about these before investing such a large sum just to save tax for a 65 year old.

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