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Old 24th March 2006, 02:11   #1
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Default Urgent financial advice required

The financial year is coming to an end and I need to invest about 20k urgently.
This is out of the 1lac that is permitted for tax saving purposes.
I've already used up 70k in ppf and about 10k for paying an LIC premium.
Just 2 questions . . . .

1. I've decided to invest in one of these equity / unit linked insurance schemes which are flexible, give good returns and save tax.
The question is
"Whether this is a good decision or there is a better option and why?"

2. If this is the best option, which of the players should I select.
LIC
TATA AIG
HDFC
Reliance
Max New York Life
Any other


The issue is that whenever I ask any agent / consultant for advice, they speak only on behalf of the company they r representing and try and convince me to go for it.

I'm thoroughly confused and would like to make the best possible decision as these investments are for a long term and premiums have to be paid every year.

Please give your opinions at the earliest as it will take a few additional days for the cheque to clear and I need to close this by the 31st.

Thanks
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Old 24th March 2006, 10:29   #2
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Ask three things..

1. What are the initial charges..
2. What are the Top Up cahrges
3. What are the renewal charges
4. What are the annual maintanance charges.
5. What flexibility does it offer entry & exit
6. Exit Load
7. Current NAV
8. Choice of Funds & # of switches permiteed and charges there-of
9. A chart showing the various funds progress since inception
10. Pls DISBELIEVE tall calims by anyone!!.. These are unit linked - lots of ppl out htere giving false projections - its after all an excel programme - very easy to manipulate. By law they are supposed to give a projection only @6% and 10%.. And rememebr - also remember the current growth rates WILL be diffiult to maintain.
11. You can expect a return of between 12-18% in a time frame of 15 yrs... This is a very safe assumtion - and any study of the stock markets will also reveal the same. therefore dont get misled by any tall claims and promises.
12. Reliance has already been told - THIS IS NOT TELECOM - by the regulator!! ... Stick to Companies with Life inSurance Background..
MAX, AIG, ING, AVIVA,

Hope this helps...For more info PM me!
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Old 24th March 2006, 11:31   #3
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bikefreak... you have already made an investment whose pattern I am not really very comfy with. I take it that you are not more than 25... max 30. If so I would say 70k of your 1L in ppf is a rather defensive approach at your age. But now that you have done it already it can't be reversed. You have also paid for an LIC policy. So you already have some amount of Life coverage I believe. If your employer also covers you to some extent (most do nowadays) then that should be sufficient for you.

So now how do you invest the rest of 20k? You said you are interested in ULIP. I do not think that is the best move. Not after your current pattern of investment. It would have been ok if you would have put in lesser amount in PPF. The reason I do not find it so interesting is because they charge a very high admin fee. For the first year it could range from anywhere between 18% to 27%, depending on the operator. That is a major loss. Also, ULIPs are costly in other ways as well.

I would say put in the amount in a ELSS scheme. That way your returns can be good/high/really high (market linked, so check the scheme). The lock in is the minimum possible, that is just 3 years. Moreover there is a very low entry load of just 2.25% (for NFOs it can even be 0). In my opinion some of the best ELSS schemes that generate very good returns with high security are HDFC TaxSaver and Sundaram Taxsaver (I think its called taxsaver... check it though). Also, opt for Dividend payment option of the ELSS. That way although your principal investment is locked for 3 years you keep getting paybacks from time to time.

P.S. : For the 20k investment, spread your investment in a basket of funds rather than one. You should look at minimum 2 funds to invest in (in the ratio of your choosing). Max should be 3 different funds.

Last edited by Zappo : 24th March 2006 at 11:33.
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Old 24th March 2006, 16:58   #4
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Thanks for the advice kb100 & zappo

I was actually thinking on going in for LIC jeevan plus, which is actually equity linked along with the benefits of life cover.
I'm actually 36 and have been putting in the maximum in PPF since many years on the advice of my mom.
Now since the limit has gone up, I was thinking of other options.
But from what u said and what net search I did after that, HDFC Taxsaver or something similar seem to be better options.
Whatever it is, I'd prefer to put all the 20k in a single fund to have lesser documents and NAVs to keep track off
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Old 25th March 2006, 19:57   #5
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i'm totally inexperienced in this area, but nevertheless; bikefreak, ever contemplated investing in MF's? as far as i know, most of the MF schemes offer at least 80% returns on a yearly basis- some of the players posted 105-150% returns for the previous year. besides, aren't MF's tax deductible as well under section 80c...? or was that 80L? it would be a much better option than unit linked insurance plans now, wouldn't it...?
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Old 26th March 2006, 09:08   #6
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Stay away from insurance. Its a black hole which will suck you in. ELSS is the way to go, but risky. Minimize risk by investing 2K each in 10 different funds
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Old 26th March 2006, 09:43   #7
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mutual funds would be a safe bet where the lockin period is 3 years and most of the MFs are doin well.
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Old 18th September 2008, 17:54   #8
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Heard it the best time to think about mutual funds.

Advise anyone?
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Old 18th September 2008, 18:14   #9
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Think as in invest or pulling out of MFs ?
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Old 18th September 2008, 18:20   #10
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right now its the best time to run away from the stock market or anything related, as fast as you can.
Of course every iBanker will tell you this is the right time to invest.
1. When stock market crashed to 17000 they said, its bottom invenst now
2. When sensex touched 15000 they said this is the real bottom invest now
3. when sensex touched 14000 they said lot of support
4. And now it may kiss 12000 or below
An iBanker will tell you its a good time to invest no matter where the sensex stands. Thats his/her job. If you don't invest they will go hungry.
So use your judgement and stay away from recommendations on all the websites etc., which say "Buy mutual funds"
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Old 18th September 2008, 18:32   #11
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bike freak, you are planning to invest to save taxes in short term? when the economy is in doldrums?

pay the meager amount in taxes and save the money you have in hand....rather use it where u need it. I have resisted this temptation many times and am happy i did it.
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Old 18th September 2008, 18:40   #12
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AFAIK, there are safe ways to invest long term. For example long term 3 year + fixed deposits
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Old 18th September 2008, 18:45   #13
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What about NSCs are they a good option in these days?

@vivekiny2k: Bikefreak asked this in 2006
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Old 18th September 2008, 18:51   #14
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eeeeeeeeeeeeeesh, as a bong will say.
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Old 18th September 2008, 18:52   #15
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I think it is a good time to invest in equities. if you were not scared to invest when sensex was 19000 ( I was ), you should not be scared now since your loss will be much less and your gain can be much more. The other investment avenues such as Gold and Real Estate are quite high too.
If you do not want to take risk now, Do not invest when sensex touches 19000 again ( a few months / years from now ) and stick to Fixed Deposits / Debt Mutual funds.
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