[sansvk]

Originally Posted by swiftnfurious

I don't want too many ELSS MFs, 2 is more than adequate, but 'which two' is the question. 🙂

For the amount your investing in ELSS, one fund is sufficient. Since you already have the Axis LT, I would suggest to continue with that.

Over the years, your contribution to ELSS would reduce as the 80C limit would easily be exhausted by tution fee, home loan, EPF etc.

[Thilak29]

I have been investing in MF via SIP for the last couple of months. I did some reading on my own and built below shown profile. Now more I read, I get concerned if my choices are skewed - I would be grateful if someone could take a quick look and advise.

SIP amount: 2000 each per fund/monthly

1. Tata Digital India Fund
2. Kotak Bluechip Fund
3. Kotak Emerging Equity Scheme Regular
4. Kotak Standard Multicap Fund Regular (erstwhile Select Focus fund)
5. Invesco India Multicap Fund
6. SBI Blue Chip Fund
7. SBI Magnum Multi Cap Fund
8. Axis Liquid Fund
9. Axis Long Term Equity Fund
10. L&T Tax Advantage Fund
11. IDFC Tax Advantage (ELSS) Fund
12. Aditya Birla Sun Life Frontline Equity Fund

[aadya]

Originally Posted by Thilak29

1. Tata Digital India Fund
2. Kotak Bluechip Fund
3. Kotak Emerging Equity Scheme Regular
4. Kotak Standard Multicap Fund Regular (erstwhile Select Focus fund)
5. Invesco India Multicap Fund
6. SBI Blue Chip Fund
7. SBI Magnum Multi Cap Fund
8. Axis Liquid Fund
9. Axis Long Term Equity Fund
10. L&T Tax Advantage Fund
11. IDFC Tax Advantage (ELSS) Fund
12. Aditya Birla Sun Life Frontline Equity Fund

I had really quick look. I would say too many funds for investing 24k per month. You can have 4, at the max 5 funds.

1.Three tax saving funds are not needed one should be sufficient, axis vs l and t.(12-2=10)

2. Please understand liquid funds. They are just like the savings account with slightly better tax-adjusted returns and safety(can't loose a debit card). A liquid fund can be used for parking large sums of amount for a short-term, few weeks to a year. Do not do an sip in liquid fund(10-1=9)

3. Avoid thematic funds with heavy sectoral exposure, particularly in sectors with cyclical and international winds. Anyway good tech companies are always included in other funds. Avoid digital India - its a trick to utilise nationalist sentiment (9-1 =8)

4. Select one each with multicap, bluechip(or frontline) and emerging(small/midcap) in their names.(8-4=4)

So for the purpose of sip, 4 funds - one each of tax saving, bluechip, multicap and emerging would do. One liquid fund for parking surplus cash. I am not at expert, just an investor with some experience.

[pnredkar]

Originally Posted by aadya

2. Please understand liquid funds. They are just like the savings account with slightly better tax-adjusted returns and safety(can't loose a debit card). A liquid fund can be used for parking large sums of amount for a short-term, few weeks to a year. Do not do an sip in liquid fund(10-1=9)

Sorry if I am hijacking the original query. But I need some education here. I have been investing in mutual funds for more than 10 years, but I have started using liquid funds only recently. I have seen similar statements at multiple places, that you should not use invest in these for long term but only as a make shift parking place. Why is it so? As I see, the return graphs are way more consistent than debt funds. So, why is it not recommended that you keep a small amount of you portfolio (say 10%) permanently invested in liquid funds? Can someone please explain in layman terms.

Thanks in advance.

- Prasad

[aadya]

Originally Posted by pnredkar

Sorry if I am hijacking the original query. Why is it so? As I see, the return graphs are way more consistent than debt funds. So, why is it not recommended that you keep a small amount of you portfolio (say 10%) permanently invested in liquid funds? Can someone please explain in layman terms.

Thanks in advance.

- Prasad

We see a similar graph between liquid funds and long-term debt funds due to the current interest scenario. The interest rates have been on a downward trend since 2008. In layman's term Liquid funds=Savings account, Long-term debt funds=Fixed deposit. SIP=Recurring deposits. We don't do an RD to collect money in Savings account, do we?

Liquid funds invest in highly safe securities with very short maturities so they have sufficient cash flows to pay the redemptions immediately(Usually next working day). But Long-term debt funds take little more risk and invest in securities with variable risk for a longer duration of period. Risks and returns run parallelly.

I have kept up to 25 lakhs in a liquid fund for a period of 1.5 years when there was a pending payment with an uncertain timeline. I felt risky to keep such a high amount in any liquid bank account safely. No thumb rule but a convenient practice is to keep 2 months of total monthly outgo in Savings account, 6 months of monthly outgo in a liquid or short-term debt funds. Pay EMIs/Bills from the savings account and STPs to mutual funds from the Liquid funds. This 8 months reserve is not considered an investment, but a buffer(like a jerry can of fuel on long trips).

[pnredkar]

Thanks Aadya for the elaborate reply. I plan to hold on to my "jerry can" investments a little longer till the regular debt funds start showing the returns worth their risks.

[Thilak29]

Originally Posted by aadya

I had really quick look. One each of tax saving, bluechip, multicap and emerging would do. One liquid fund for parking surplus cash. I am not at expert, just an investor with some experience.[/left]

Your experience speaks! thanks much, i will make some changes based on risk profile assessment and goals.

[ventoman]

Originally Posted by aadya

...
I have kept up to 25 lakhs in a liquid fund for a period of 1.5 years when there was a pending payment with an uncertain timeline. I felt risky to keep such a high amount in any liquid bank account safely. No thumb rule but a convenient practice is to keep 2 months of total monthly outgo in Savings account, 6 months of monthly outgo in a liquid or short-term debt funds. Pay EMIs/Bills from the savings account and STPs to mutual funds from the Liquid funds. This 8 months reserve is not considered an investment, but a buffer(like a jerry can of fuel on long trips).

Wonderful insight!
I've been actively investing in MF over last 2 years, but never thought of a STP from liquid to equity funds. I've either kept the "jerry can" in savings account or scraped around other saving pockets and invested. Thanks for this excellent tip.

[bluevolt]

Originally Posted by Thilak29

SIP amount: 2000 each per fund/monthly
[/list]

Please limit the number of MFs to up to a maximum of 5. It will be a hassle for you to manage all of these and analyze over the period of time.

[Weathered]

Originally Posted by aadya

I have kept up to 25 lakhs in a liquid fund for a period of 1.5 years when there was a pending payment with an uncertain timeline. I felt risky to keep such a high amount in any liquid bank account safely.

Thanks for the info on liquid funds. If I have an impending payment of few lakhs in the next 6-9 months time frame then going by what you prescribed, I'd be better off to move that amount to a liquid fund and park it there? So when the date of payment nears I can redeem it back to my savings account and then cut a cheque to the payee.

[govigov]

Originally Posted by aadya

STPs to mutual funds from the Liquid funds. This 8 months reserve is not considered an investment, but a buffer(like a jerry can of fuel on long trips).

Thank you, as mentioned by posters above me, your experience speaks and makes sense.

I have only been investing in some ELSS and some equity funds for the last 3 to 4 years, however, I am yet to take a withdrawal from these funds, nor do I plan to in the near future.

If I am switching to liquid funds, this means, that I would have to do more transactions between liquid funds to a savings bank. Wouldn't this contribute to STCG? In that case, which ITR would you need to file? Currently, I file, ITR-1 for salaried employees. Wouldn't this add to the tax load? Am I sounding foolish?

[Caffeinated]

Got to know that Coin(Zerodha's MF platform) is no longer charging the monthly fees of Rs 50, and is free now (https://zerodha.com/z-connect/featur...ompletely-free). Since I have used their Kite app, starting with this was pretty smooth. Functionality and UI are simple and intuitive.

Its speculated that this is due to the upcoming PayTm Money launch.

[aadya]

Originally Posted by govigov

If I am switching to liquid funds, this means, that I would have to do more transactions between liquid funds to a savings bank. Wouldn't this contribute to STCG? In that case, which ITR would you need to file? Currently, I file, ITR-1 for salaried employees. Wouldn't this add to the tax load? Am I sounding foolish?

If you have a savings account interest income of more than Rs.10000 per annum(for example if we park three lakhs in sbi savings account cumulative interest would be Rs.10500, in Kotak, it would be Rs.18000 and in yes bank it would be 21000). The excess interest would be taxed as per your applicable slab.

If somebody is in 30% slab with regular cash flow and want to park emergency cash of more than a couple of lakhs a liquid fund is a good option. And fortunately, if you do not use it for three years you get to use LTCG option which is way more beneficial.

In case of STP or frequent transactions between liquid funds and savings account, slightly complicated STCG calculation needs to be done. Nothing impossible with all the computing power available with us. But liquid funds are certainly not tax inefficient in comparison with savings account.

[Shankyz]

I was trying to search for MFU registration details in the thread and found some references but not the detailed process/procedure and documents required for the same. Can someone share the same please and also comment which one of MFU or Coin are better for online purchase and redemption of direct Mutual Fund plans.

[carbookie]

Originally Posted by Shankyz

I was trying to search for MFU registration details in the thread and found some references but not the detailed process/procedure and documents required for the same. Can someone share the same please and also comment which one of MFU or Coin are better for online purchase and redemption of direct Mutual Fund plans.

MFU
Go to their website and follow instructions to generate CAN number. If your KYC is already done, the process will be fully online and take 10 days

I feel mfu is better than coin.

You can also try kuvera. Very fast, responsive and excellent UI. Free for now