Mr. Ritesh Shah wrote :::
"Hello
I need your help to plan my investments. The background....
I am 32 and I started investing regularly since this year. I invested through
SIP on a monthly basis.
Please advise if I need to stop any of these SIPs / switch to other funds.
Kotak Opportunities - Growth - Rs 5000 Per Month
Birla Sun Life Frontline Equity Fund-Growth - Rs 5000 Per Month
DSP India T.I.G.E.R. Fund - Growth - Rs 5000 Per Month
Prudential Infrastructure Fund - Growth - Rs 5000 Per Month
Reliance Vision Fund - Growth - Rs 5000 Per Month
Reliance Growth Fund - Growth - Rs 5000 Per Month
Ritesh Shah"
SRIKANTH SHANKAR MATRUBAI 's reply ::::
"Dear Ritesh,
Your portfolio is neat, compact and nearly perfect for your age. There is very little change required, in fact, if any.
But still, you could switchover from Prudential Infrastructure Fund to ICICI Infrastructure or DSPML Tiger Fund, in the infrastructure Space.
Also, you could stop your sip in Reliance Vision Fund, for now as it's performance has been below average recently. You could invest in HDFC Top 200 fund or Sundaram Select Focus fund. This will not only maintain your large cap bais, but also reduce your slight overexposure to Reliance Mutual Fund House.
And, one more thing, split your 5000 into 2000 (2) and 1000 (1) sip over three different dates to maximise the advantage of volatility in the movement of NAVs.
Other than the above, I would like you to take a small exposure (say 1000 per month) into an International Fund (Templeton India Equity Income Fund/Birla Sunlife Intl fund) and also into a Commodity Fund like (DSPML World Gold fund / Mirae Asset Global Commodities Stock Fund).
These would compliment your portfolio perfectly.
After 5 years or so, gradually shift away from Sector/Commodity Funds into Diversified Equity Funds.
Best of luck.
Regards,
Srikanth'
3 comments:
Dear Srikanth,
Allow me to thank you for your timely advice regarding my last mail,must say ur adding on to your good deeds!
Recently,I came accross a ULIP,conidering you have always ben in favour of term insurance over ULIP,I had a detailed study of this IPru product:
ICICI Life time gold
Example:
Premium : 24,000
Life Cover:25,00000
Rider:10,0000
Total Accident death benefit:35,00000
Minimum premium paying term:3 yrs
Total Charges including prmium allocation,mortality,taxes etc : 8000{1st 5 yrs)
Total amount invested in market:17,000(1st 5 yrs)
the most attractive feature of the plan is after the 3rd year if a stop paying the premium,my life cover continues till i expire,assuring sum assured or fund value whichever is higher.
Comparing it to a term plan,over a period of 20yrs for a cover of 35lacs il end up paying 9000 per year.9000*24 (not to forget,there is 0 survival benefit)
so if we compare,for a cover of 35 lacs,in 20yrs
ULIP cost : 72,000(survival benefit applicable according to fund value)
Term cost:2,16000(NO survival benefit)
even if the fund choosen for the ULIP plan is debt oriented,giving a modest 8% returns,the mortality charges will be taken care off,maintaining the cover of 35lacs over the entire lifespan.
So, is term plan still better?
Hope i have been able to explain my question elaborately,please provide ur view point over the same,waiting eagerly.
Thanks Sri,
Warm Regards,
Amit
Dear amit, U forget to post the age for which ur prem. quotes & benefit illstrations were made. Also in case of ULIP u used, 20 years term whereas in case of term plans u used 24 years.
I'm unable to understand the same.
I'll try my best to answer u.
1. In term plans, mort charges r charged all over the term for ur entering age.
In ulips, mort. charges r charged for ur running age.
2. As per ur illustration, if u stopped prem. after intial 3 years, ur policy may be closed midway, as mort. charges (which 'll be recovered by cancelations of units monthly now) 'll go up & during prolonged bear phase, ur funds may not performs to earn returns to sustail the policy.
3. In case of term plans, if there is a claim (from day 1 to last day of policy), the returns from the policy 'll be very higher, in terms of SUm assured received against total prem. paid till date.
In case of ULIPs & specially sum at risk type ULIPs, ur family 'll get higher of sum assured or fund value. Imagine a scenario (here i assume u r continuing ur prem.) where after 12 years ur fund value is 21L rs. which is below the sum assured. so at this juncture if a claim is made on ur policy, ur nominee 'll get only 25L Rs. (35L Rs. in case of death is an accidental one) & the Ins. co. 'll forfiete the 21L Rs. of ur fund value.
Now tell me who is the winner in this case- u or ur ins. co.
4. Even for term plans, i never recommend for static cover of X amount for Y term. Instead I advise for split covers. For ur example of 25+10L cover for 24 years, my advise 'll be 15+5L for 15 years & 10+5L for 20 years.
Normally every person have higher liabilities in intial phase of life regarding home loan, car loan, Kids education etc. which come down over the period, hence an static cover of 25+10L for 20 years is not worth of it.
Even u may discontinue ur one ins. policy of shorter duration, if that much liab. r over or enough financial provisions have been made for the same.
5. most of ULIPs r started during the great bull run, & their performance under long bearish phase is yet to be sen.
6. Transperency is an issue in ULIPs.
7. Premature exit due to nonperformance of funds is a very costly affair.
I can post more but i'll wait for ur reply.
My vote is always with Term + MF combo.
Thanks
Ashal
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