[akhil994]

Hi guys,

Need some advice from seasoned investors. I am just planning to start investing in SIPs and the two I have selected are Kotak Select Focus and Mirae Emerging bluechip.

For the third fund I wanted to go with DSP Blue Rock Micro Cap, but they are not currently accepting investments so have shortlisted ICICI Pru Top 100 Fund and Birla SL Small and Midcap Fund and SBI BlueChip Fund.

I have planned to put in only about Rs 1k per month in each (Fresher's salary and also have another policy from Birla Sun Life which is a cover policy only) and plan to increase it within the next few months.

1. Which would be better of the three being considered?
2. What is the difference between , say Kotak Select Focus Fund - Regular and Kotak Select Focus Fund - Direct? Quite a few funds have these types with different RORs.
3. Is there also an option to increase the invested amount later on?

[altius]

For a new investor, it is advisable to start with large cap equity fund or a balanced fund. Your list seems to have mainly mid or small cap funds and their is a higher risk in the current market situation, which is why DSP Black Rock may have stopped accepting new investments. You can go to www.valueresearchonline.com and select good 4 to 5 star funds with good track record for over 5 years atleast.

Regular is buying through a broker like financial advisor or online net banking account or trading account. They have higher operating costs that include broker commission. Direct is buying through the Mutual funds website directly without broker commission due to which the funds returns will be a bit higher. The only disadvantage of Direct is you have to create account in each mutual fund house website. Hope this helps.

Originally Posted by akhil994

Hi guys,

Need some advice from seasoned investors. I am just planning to start investing in SIPs and the two I have selected are Kotak Select Focus and Mirae Emerging bluechip.

For the third fund I wanted to go with DSP Blue Rock Micro Cap, but they are not currently accepting investments so have shortlisted ICICI Pru Top 100 Fund and Birla SL Small and Midcap Fund and SBI BlueChip Fund.

I have planned to put in only about Rs 1k per month in each (Fresher's salary and also have another policy from Birla Sun Life which is a cover policy only) and plan to increase it within the next few months.

1. Which would be better of the three being considered?
2. What is the difference between , say Kotak Select Focus Fund - Regular and Kotak Select Focus Fund - Direct? Quite a few funds have these types with different RORs.
3. Is there also an option to increase the invested amount later on?

[anupamsinha]

Originally Posted by altius

For a new investor, it is advisable to start with large cap equity fund or a balanced fund. Your list seems to have mainly mid or small cap funds and their is a higher risk in the current market situation, which is why DSP Black Rock may have stopped accepting new investments.

I would like to differ.

For a new investor assuming you have no liabilities I will say go for the riskiest investment. As this is the stage when you can invest in instruments which are riskier in nature.

DSP BR Micro Cap fund has stopped taking investment because they felt it will be difficult to manage all these funds and the valuations of mid cap have also seen a massive rise.

[C300]

Originally Posted by anupamsinha

I would like to differ.

For a new investor assuming you have no liabilities I will say go for the riskiest investment. As this is the stage when you can invest in instruments which are riskier in nature.

DSP BR Micro Cap fund has stopped taking investment because they felt it will be difficult to manage all these funds and the valuations of mid cap have also seen a massive rise.

Its also important to check the age of the new investor. We usually assume new investor to be a youngster in 20s starting the investment journey which may not be true.

[pradkumar]

The problem with this approach is that if new investors suffer losses, they will never ever come back to mutual funds. That is precisely why most good investment experts would ask them to start with a tax saving fund, balanced fund, and large caps.

Pradeep

Originally Posted by anupamsinha

I would like to differ.

For a new investor assuming you have no liabilities I will say go for the riskiest investment. As this is the stage when you can invest in instruments which are riskier in nature.

[avinash_m]

Gurus, please advise..

If one has a long term investment horizon of say at least 20 yrs, should one invest in a MF in one go (SIP for 20 yrs) or do it in short bursts of say SIP for 4-5 yrs and upon completion put the matured amt. back into the same MF as lump sum along with starting a new SIP? Underlying assumption being the MF is consistent performer over both short and long terms.

Thanks in advance.

[bullrun87]

Originally Posted by avinash_m

Gurus, please advise..

If one has a long term investment horizon of say at least 20 yrs, should one invest in a MF in one go (SIP for 20 yrs) or do it in short bursts of say SIP for 4-5 yrs and upon completion put the matured amt. back into the same MF as lump sum along with starting a new SIP? Underlying assumption being the MF is consistent performer over both short and long terms.

Thanks in advance.

There is no point in investing in short bursts only to take the sum out and reinvest. One should always invest in SIP's with a goal in mind and let them continue to the full duration. The only case where taking out your money is justified before your target is achieved is when one or more of your schemes have been underperforming for a long time

[DigitalOne]

Originally Posted by anupamsinha

I would like to differ.

For a new investor assuming you have no liabilities I will say go for the riskiest investment. As this is the stage when you can invest in instruments which are riskier in nature.

DSP BR Micro Cap fund has stopped taking investment because they felt it will be difficult to manage all these funds and the valuations of mid cap have also seen a massive rise.

I agree. Take a bit of a risk. Go for Small-cap/Mid cap funds if you don't have any liabilities. In the long run (8-10 years), small/mid caps will give a significantly better returns. Anyway you are de-risking by investing in SIP mode. Go for it

[DigitalOne]

Originally Posted by avinash_m

Gurus, please advise..

If one has a long term investment horizon of say at least 20 yrs, should one invest in a MF in one go (SIP for 20 yrs) or do it in short bursts of say SIP for 4-5 yrs and upon completion put the matured amt. back into the same MF as lump sum along with starting a new SIP? Underlying assumption being the MF is consistent performer over both short and long terms.

Thanks in advance.

Go for shorter tenure SIPs. You can never predict which fund will do well for 20 years.

In my experience, I found 2 year SIPs to be ideal. Not too much of tracking and reshuffling, and enough time to weed out non-performers. If the fund is not performing well after 2 years, I don't renew the SIP. I start SIP in another fund.

I keep the older fund for a year more to see performance. If it doesn't improve, switch to another fund. So you will not have to pay any capital gains also, or exit loads.
---
The key is to keep the amount invested in Equity constant, and not make it languish in SB account. Also keep the total monthly SIP amounts constant (or increasing).

[techcoze]

I have ready to use corpus of few lakh rupees. I am planning to invest this money in mutual funds. What's best option for investment?

- Direct lump sum investment? (is market level good to enter?)
- Monthly SIP (if yes, then for 6 / 12 / 24 months?)

Note that money is not sitting idle, it's parked in SBI max gain home loan account which virtually gives me returns of 9% (in terms of benefit in loan interest payout)

Please advice

[inder]

Originally Posted by techcoze

I have ready to use corpus of few lakh rupees. I am planning to invest this money in mutual funds. What's best option for investment?

- Direct lump sum investment? (is market level good to enter?)
- Monthly SIP (if yes, then for 6 / 12 / 24 months?)

Note that money is not sitting idle, it's parked in SBI max gain home loan account which virtually gives me returns of 9% (in terms of benefit in loan interest payout)

Please advice

I am in a same position as yours. Although the money is parked in savings account. I am planning to split the money in:
Short term Debt fund
Corporate debt fund
Debt oriented balanced fund.
I have exposure to the stock market directly and since it is at an all time high, have taken this approach.Besides this money is to be parked to get returns more than an FD, thats my expectation.

[pradkumar]

This video should answer most of your questions.

Where to park my lumpsum money for 3 years till it gets invested in equity systematically?

https://www.youtube.com/watch?v=88zYkK8DfFM

You can also look up this section on Value Research for such questions:

https://www.valueresearchonline.com/hangouts/

Originally Posted by techcoze

I have ready to use corpus of few lakh rupees. I am planning to invest this money in mutual funds. What's best option for investment?

- Direct lump sum investment? (is market level good to enter?)
- Monthly SIP (if yes, then for 6 / 12 / 24 months?)

Note that money is not sitting idle, it's parked in SBI max gain home loan account which virtually gives me returns of 9% (in terms of benefit in loan interest payout)

Please advice

Originally Posted by inder

I am in a same position as yours. Although the money is parked in savings account. I am planning to split the money in:
Short term Debt fund
Corporate debt fund
Debt oriented balanced fund.
I have exposure to the stock market directly and since it is at an all time high, have taken this approach.Besides this money is to be parked to get returns more than an FD, thats my expectation.

[avinash_m]

Originally Posted by bullrun87

The only case where taking out your money is justified before your target is achieved is when one or more of your schemes have been underperforming for a long time

Originally Posted by DigitalOne

Go for shorter tenure SIPs. You can never predict which fund will do well for 20 years.
In my experience, I found 2 year SIPs to be ideal. Not too much of tracking and reshuffling, and enough time to weed out non-performers. If the fund is not performing well after 2 years, I don't renew the SIP. I start SIP in another fund.
I keep the older fund for a year more to see performance. If it doesn't improve, switch to another fund. So you will not have to pay any capital gains also, or exit loads.
The key is to keep the amount invested in Equity constant, and not make it languish in SB account. Also keep the total monthly SIP amounts constant (or increasing).

Thanks for the feedback folks! Although I am more confused now

I guess I am currently on @DigitalOne's approach but my only concern with that is whether I am losing out in the long term.
Say I started a SIP of Rs 100/- in a 5 star equity fund for 3 yrs. Upon redemption, started another SIP in a similarly rated fund (at the time) for the next 3 years, and also re-invested the redeemed amount (as lump sum) in the new fund. My query is if I am losing taking this 3 yr (short) approach rather than being invested for (longer) 6 yrs at a stretch!? In fact, I might just continue in the same fund with a new SIP + lump sum Redeemed Amt. at the start of 4th year; is that a disadvantage as compared to SIP investment for 6 yrs stretch!?

Sorry if this sounds noob but any advise would really help.

[DigitalOne]

Originally Posted by avinash_m

Thanks for the feedback folks! Although I am more confused now

I guess I am currently on @DigitalOne's approach but my only concern with that is whether I am losing out in the long term.
Say I started a SIP of Rs 100/- in a 5 star equity fund for 3 yrs. Upon redemption, started another SIP in a similarly rated fund (at the time) for the next 3 years, and also re-invested the redeemed amount (as lump sum) in the new fund. My query is if I am losing taking this 3 yr (short) approach rather than being invested for (longer) 6 yrs at a stretch!? In fact, I might just continue in the same fund with a new SIP + lump sum Redeemed Amt. at the start of 4th year; is that a disadvantage as compared to SIP investment for 6 yrs stretch!?

Sorry if this sounds noob but any advise would really help.

At the end of the third year, you can continue (restart) SIP in fund A if it continues to perform well.

All I am saying is it is difficult to predict which fund will keep continuing to do well for extended periods of time. So better take a call every two years.

[pradkumar]

For those who think that equities alone are enough for the next 10 to 20 years, here is a different and interesting take:

https://www.valueresearchonline.com/....asp?str=34058

You'll see that with annual rebalancing as I have described above, having 40 or 60 per cent equity is a great option. Rs 10,000 grew to 58,600 at 60% equity which was much better than pure equity. In fact, pure equity was the worst of the lot. The returns are lower, and yet there is much higher volatility. When the markets fall, the 40% and 60% allocations fall much less than the 80% or pure equity options. They also rise less when the markets recover, but that's fine because they fell less in the first place.

Pradeep