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+1
I am in a similar situation and will wait for experts to suggest some tips.
I am investing in mutual funds since 2005 (but I have just started reviewing these since about last one month). I have been using the services of BlueChip Investment India and have used their recommendations.
On review I found that around 30-40% of the funds gave me negative return.
Some of them have given me good returns too.
Now I am in the process of redemption of those which have not performed well.
The problem with the data that I have is that it is not complete. Every transaction is MANUAL. For example, I have in 2008 redeemed or sold some funds, but I can't see any entry in their tracker/ portal, since maybe someone did not do the manual update.
Similarly, I have a feeling that not all of my funds are listed there. Again, there is a manual entry done by some operator after we fill in the forms. So potential for missing out something is high.


Is there another portal/ company where I can buy/ sell only and it does not rely on manual entries for such transactions.

I have been recommended the following plan by the consultant:
ICICI Pru SmartKid Premier - Education Plan - ICICI Pru life

My requirement was to have some kind of MF investment for my son (for next 10-15 years)
I was told that the SmartKid plan is an MF, with SIP option and tax free returns. Plus if I die in the next few years, then the company keeps making the premium payments (this is not available in a normal MF).

I am also planning to select some high performing MF and put in around 5-10K per month via SIP.

HDFC Top 200 (or some similar sounding name) is what I have selected for SIP.

I went to a B-school and this is what my favorite finance professor had to say. And I must say that when it comes to investing, probably this is more true than any other so-called-tip that you can get. The brilliant thing is that you don't have to be a Financial wiz kid to understand this.

Asset allocation has to be based on
1. Age: The younger you are, the more your portfolio has to be skewed towards equities (when I say equities it is equities focussed Mutual Funds). Why not specific stocks? Because you are not a Financial wiz, so you won't know much. More on that later.
As you get older, you should shift your asset allocation towards Fixed Income (PPF, FDs, etc. etc.)

2. Understand your Financial requirements.
This again goes back to the first point stated. If you have to make some investment or big expenditure in the near future, then you would be well advised to be invested in Fixed Income segment as against Equities.

3. The past performance of Mutual Funds isn't an indicator of what Future performance might turn out to be like (I know I know every Mutual Fund prospectus shouts that loud and we don't listen). That said however, it is best to invest in Funds manage by large houses because they have a lower Fund Management fee per amount of fund they invest in. Why you may ask? Example: If you need 5 Fund Managers to manage say 20,000 Crores (AUM), you won't need another 5 to manage another 20,000. Economies of scale matters. In addition to this, marketing costs per rupee that large funds manage is lower than the ones that small houses manage.

So which Fund Houses to go for: BIG BIG ones.
Read: Reliance, ICICI, HDFC, SBI.

4. Risk appetite: Won't go in much detail on this front. The higher risk you can take, the more your allocation should be skewed towards equities.

SIP is the best way to go: For the very simple reason that you can't time the market. And hence you can't really know what time to invest and what time to redeem.

Oh yes there are plenty more things to ponder over. But the above listed ones will take care of 90% of the thought process that goes into investing for about 99% people in the world. The rest 1% are either lucky monkeys or well connected monkeys. And you definitely won't know how to become one.

A excellent post. My comments about some of these

The rule of thumb is that the maximum percentage of your assets which should be in equity is (100- your age). I was told this by the boss of a life insurance co some years ago.
I am not too sure about a few of these. I avoid any corporate house based funds, and PSU funds. I will add a few more to this list - DSPBR, Franklin-Templeton, IDFC. I am not putting in Fidelity since the future of Fidelity in India is uncertain at the moment.

Also, avoid Equity type schemes of Life Insurance cos. Their skills are in debt and not Equity.

I will also add Tax Free Bonds, and Debt Funds to the money list. An 8% return on a 30% tax bracket adds up to 11+%. Debt finds tend to give you excellent returns, esp. in a falling interest rate scenario. Also, you have benefits of indexation when you get out.

My problem is that I feel younger than my age!

Congrats on that, put 100% into Equity!

Just remember nowadays the market seems to be running in 5-6 years cycles (was 10/20 earlier). So make sure that you are not it the low situation when you need the money. Also, fixed income is very useful for retirees who need a steady income.

Nobody can read the markets with any certainty (with apologies to Rakesh Jhunjhunwala). I remember when the Sensex crossed 6000, the wealth manager of my bank advised me to pull out as he expected a drop (this was with HO approval). Thank God I did not!

Excellent post Animesh.

The only thing I want to add is please put a nominee by all means. We have had an unfortunate death in my wife's family and we are running from pillar to post to get the MFs redeemed.

Please include an email ID so that all your funds can be tracked to the registered email ID. Remember that when you have multiple funds and when you have long-term investments where you keep switching funds, the registered email ID comes to your rescue. You can track all your funds from CAMS online or Karvy. For consolidated account statements, Karvy is better because they combine CAMS along with theirs. For example, if you have Reliance funds, Karvy is their investor service provider and not CAMS.

https://www.karvymfs.com/platformservice/

http://www.camsonline.com/default1.html

Pradeep

Exactly. Equities are supposed to outperform Fixed Income funds in the longer haul. And by longer I mean 5 years or more. The more time one has, the better returns one can expect.

How better your fund is managed depends more on the Fund Manager than on the Mutual Fund house. And you expect better Managers to be paid better and Large Fund houses can do that better. I do agree that Fund Houses listed by you are also well managed ones, however I will probably be more comfortable dealing with the large ones. They have better Research Team as well. So I guess it is more of a personal opinion than a rule here.

Totally YES.

Currently the Tax Free Infra Bonds don't compete with Tax Planning Equity Schemes, so no case for prioritizing here. I would always invest 20K in Tax Free Bonds. However as far as normal Tax Free Bonds go with annual return of 11% (for a 30% or more Tax Bracket), it depends on the choice of asset allocation. The factors I listed in the earlier post count. I would (30 year old individual) invest more in equities than in Bonds. So it would be more likely a 90%-10% Equities-Fixed Income for me.

These are very good points and well stated. One can go wrong with the choice of allocation and in times when the Economy and/or Stock Market isn't performing well. But, one should never go wrong on things that Pradeep stated. Worth every smart tip.

There are two things here. One is the 20,000 which you can invest and claim a tax deduction under 80CCF. There are also deposits which have tax exempt interest. Both are infra so the confusion is legitimate. I was referring to the latter. Agreed ELSS is better (one more year before the DTC kicks in) but these schemes are useful in the money component. Most of these agencies are rated AA or higher.

Just to add to this point, nomination does not guarantee that the nominee will receive funds from the bank of fund house automatically. Normally, the last will of the person takes precedence. If the person dies without a will, you will have to file for succession even if the nomination is in place.

Also, nominate someone who is younger to you like your spouse, sibling or child. I know of people where nominees were parents. It puts them in a very sad situation.

Of course it is important to nominate, but even more important is to create a will.

I believe ICICI Pru SmartKid Premier is an ULIP plan. My take will be - Please stay out of it. These ULIP's have all kind of charges that will eat up a part of your premium. Rather a simple term insurance + MF SIPs will help in building a better corpus for your Kid.

^^ i Second Sbala On above. I did this mistake some 4 years ago and Paying the price.to put it here, My Fund value is same for last 4 years some how and Every Year, Kotak guys make sure that they charge me 1500 + rs as fund charges. just hoping for the markets to recover ( highly un likely IMO ) or atleast get a decent 10 % Profits before i kick them out of my portfolio and invest in better fund houses. IMO kotak is the worst, from my experience & SBI is Best .Reliance , I won;t recommend to my even to my enemy .

Can you give me some examples of such schemes to aid my understanding? I am very new to all of this.

I have invested in NHAI infra bonds and IDFC infra bonds in January.
What is indexing and what are the benefits?

Is this email notification facility provided by all mutual fund houses? Or is this facility provided by the agency in between?

I have never received any emails from anyone (e.g. statement or reports) so far. Maybe I need to check if my email address was mentioned in the form.

How are these service providers different from Welcome to Bluechip which I use at the moment?

I visited the website of CAMS just to understand what services they provide.
I noticed that under Account Information, they have listed several fund houses, but HDFC is not present.
What does this mean? They do not have a tie-up with HDFC?
How would I track my HDFC MF's in such a scenario?


Thank you for the tip. Yes there are all sorts of charges. I was simply interested in this since they have a feature wherein if I die, they will continue paying premium on my behalf, which is not the way in regular MF's with SIP.

Somehow, Kotak is very aggressive in selling their plans. I get a few calls every month from them.
Why are there contradictory assessments for Reliance? Are we referring to specific funds here?

I am not sure what exactly you mean when you say there are contradictory assessment for Reliance. I understand you could be talking about the fact that some people say that Reliance or for that matters some other fund house is what they should avoid. Look at this way - everyone is entitle to his/ her opinion and there isn't a rule book.

When I say that Reliance MF is a good fund house, I mean just look at their track record for the past 3 or 5 or since the time they have been operating. The schemes would be performing in the top quartile of the industry. Secondly, the very fact that they are one of the biggest fund houses means that they have had lot of people investing in schemes that they hold. On similar lines are HDFC, SBI, ICICI, etc.

Many ULIPs allow you to invest a percentage of the money in Equities. These are often labelled as 'aggressive'.

Indexation is the benefit of offsetting a part of the inflation against the gains. There is a Cost Inflation Index published every year. So the Indexed cost is <Index for current year>/<index for year of purchase> *cost. If you hold the bond/scrip/fund for mroe than one year then this comes into play. Under the DTC this may change to include only full financial years.

The performance of Reliance as a fund house has been very good. I avoid all corporate based fund houses since one never knows when the pressure to invest into their own Equities may be there. I know there are firewalls, but I will rather be safe(r).

IMHO Reliance Banking fund has been the biggest net grosser in my portfolio. Even now, with the market down from the 22K heights it had at one time, Reliance Banking fund continues to be my best performing fund, considering that I had put in equal amounts in 4 /5 different funds. Reliance Growth Fund has also done reasonably well.