Investment in Right Direction?

POSTED BY Parag ON October 27, 2012 12:13 pm COMMENTS (8)

Dear Ashal, Manish,

Please find below my details, please suggest if my investements are in right direction?

(A) My age : 36 years
(B) Size of family : Spouse , 2 daughters ( 9 years and 1 year)
(C) Monthly income : Rs 90K/Month
(D) Monthly expenses : Rs 30K/Month
(E) Loan liabilities : Home loan 15 lakhs (EMI: 25K : term remaining 96 months)
(F) Current assets & investments : LIC 2 policies ( 1: Double endowment plan yearly premium 3800, 2: Jeevan Surabhi money back-yearly premium 10700-12 year term), Term Plan : Aegon Religare : Cover -1.5 Crore  yearly Premium 15K, Child plan : ICICI Prudential Smart Kid : Yearly premium 10500

(G) Current monthly savings : 25K

Please suggest if in addition to above any better investment required to secure the future need?

8 replies on this article “Investment in Right Direction?”

  1. Parag says:

    Thanks Ramesh,
    As per your suggestion, Please see below CAGR (5 to 6 years) of the funds, I have invested.
    HDFC midcap opp. Fund (G) 17.46%,
    HDFC Infra Fund (G) 6.95%
    ICICI Pru Focused Bluechip Equity (G) 17.10%
    ICICI Pru FMCG (G) 26.72%
    Reliance Pharma Fund (G) 24.36%
    UTI MNC Fund (G) 18.78%
    Religare Banking Fund (G) 21.22%
    Tata Dividend Yield Fund (G) 15.07%

    Dear Ashal,
    As you suggested to narrow down to two or three funds, Can I stop the other SIP’s instantly?
    If yes , will there be any penalty?

    Thanks in advance for your opinion.

    1. Ramesh says:

      @ Parag

      1. The weighted average of all these returns according to your current SIP weightages comes out to be around 18.16%.
      2. I cannot find out the exact time frames. But over the same period, IDFC Premier Equity should give a similar return.
      3. Also see, you have selected a lot of sectoral funds, which have shown good times in the past 5-6 years, which because of the Law of Averages, will tend to underperform going forward.
      4. My point is you can get a decent average performance by selecting a long performing multicap or a large cap oriented multicap.

    2. Dear Parag, you can stop your other SIPs right now. No penalty to stop. But I’m not saying to withdraw now. Why? The reason is my dear friend, for SIPs less than 1Y old, there ‘ll be exit load as well as taxation issues (Short Term Capital Gain Tax @ 15.45% on the gain amount) for such short term SIPs.



  2. Dear Parag, instead of these current 8 fuds, I w’d like your money to be invested in just 2 funds.

    HDFC Midcap opp.
    IPru focussed bluechip

    Regarding term plan, no need to opt for HDFC Term plan, if your I-term is already more than 1Y old.



  3. Parag says:

    Thanks Ashal.
    I have started MF-SIP for long term goals~ 10 to 15 years (Total 11k/month) :
    1) Hdfc Mid cap opportunities fund: 3000/month
    2) ICICI Prudential Focused Bluechip Equity Fund :2000/month
    3) ICICI prudential FMCG FUND: 1000/month
    4) Hdfc Infrastructure fund: 1000/month
    5) UTI MNC Fund: 1000/month
    6) Religare Banking Fund: 1000/month
    7) Reliance pharma fund: 1000/month
    8) tata dividend yield fund: 1000/month

    I tried to put the investments in different sectors based on advice from close ones. Hope this portfolio will make some sense in long term.
    I am planning to switch over from current hold Term plan (Religare-i term) to HDFC term plan since I am continuosly hearing about the poor Claim settlement ratio by Religare.
    Please advice on all the above contents.

    1. Ramesh says:

      Do one thing:
      1. Use and make an account.
      2. Put these values of SIPs in the same funds and create a portfolio from say 5-6-7 years before.
      3. Find out what is the total CAGR of the whole portfolio. And show us what it is.
      4. My idea is that this entire exercise canbe reduced to 1-2 diversified equity funds with less management headache.
      5. Also, remember even if one or two of the sectoral funds do very well, you will not change their allocations in the portfolio and that will skew the whole thing in future.

      Regarding Term Insurance, if you have declared things in a clear manner, then there is no need to change from Religare. Theirs was the first to give the option of Online and they must have increased your cover too without additional charges, in case you had opted for them very early. I have not heard about any other company doing that. So, their basics are very correct.

  4. Dear Parag, please do some mathematics. If you are to spend for education for your each kid today, how much money do you feel is required?

    Now increase this amount as per inflation rate to the actual consumption year. This is your target amount. Now do calculate, how much money you should invest for each kid to reach that target got a given rate of interest or growth rate.

    By the in general, out of your 25K saving money, you should invest around 13K Rs. towards your own retirement & invest remaining 12K only for kids related goals.



  5. Rosh says:

    Dear Parag,

    1. Keep investment separate from insurance, dont mix them up. A detailed article written by manish & decide yourself whether to continue or close.

    2. Keep emergency fund ( 3-6 months expenses + EMI etc.) in savings a/c under auto sweep facility.

    3. if your time horizon is for 10-15 years, invest the remaining amount in equity MF.



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