[swiftnfurious]

Originally Posted by dre@ms

....Now what is this SIP and if investing less than 5 years, what do you suggest...

SIP = Systematic Investment Plan which is investing in a steady way for a minimum of 6 months (onwards) like we pay our EMIs.

This is a very good way to invest if we don't have a lump sum to invest initially. The con is that the fund keeps growing (as the market spikes) and by the time next monthly investment comes, the value would have gone higher per unit which means you are buying at a higher price. But for a long term, it should NOT matter.

[vasanthjn]

Originally Posted by nazimk24

It's applicable to all funds not classified equity-oriented. The only way to pay lower tax is to hold on to such funds for over three years, after which one will likely pay little to no tax, since the LTCG structure is 20 percent with indexation benefits.

(For indexation benefits, inflation for the three years will be deducted, and the tax will be applicable on the rest of the gains. )

The FM has made it very clear in this budget that the indexation benefit will not be available for the debt funds. Hence its a flat tax of 20% on debt funds.

Originally Posted by swiftnfurious

I was switching from HDFC Tax saver (to another HDFC mutual fund) and this would incur NO additional loads (exit & entry) which is a service charge kind of thing.

Entry load has been abolished by SEBI nearly 3 years back, hence none of the MFs charge entry load now. Reg the exit load in your scenario, you can redeem in HDFC Tax Saver only if your lockin period is over and in that case the need for exit load never arises. If your period of holding in the new HDFC MF doesn't complete the required holding period, then you must pay the exit load.
OT: Why dont you invest directly in MF's. If you go through an advisor/Broker/Fundsdirect/fundsupermarket all your investments are routed through normal plan which provides less return than Direct Plan which will have a difference of 3% to 4% in a span of 10 years.. Nowadays many Fundhouses allow you to invest Directly online.

[swiftnfurious]

Originally Posted by vasanthjn

....Entry load has been abolished by SEBI nearly 3 years back, hence none of the MFs charge entry load now...

Ohh. Never noticed that.

Originally Posted by vasanthjn

....OT: Why dont you invest directly in MF's. If you go through an advisor/Broker/Fundsdirect/fundsupermarket all your investments are routed through normal plan which provides less return than Direct Plan which will have a difference of 3% to 4% in a span of 10 years.. Nowadays many Fundhouses allow you to invest Directly online.

I had invested into HDFC directly. And then I added this thru ICICI Direct as I wanted a consolidated list of my stocks & mutual funds. And the same reason why I switched it using the same platform.

[vasanthjn]

Originally Posted by swiftnfurious

I had invested into HDFC directly. And then I added this thru ICICI Direct as I wanted a consolidated list of my stocks & mutual funds. And the same reason why I switched it using the same platform.

You can convert all your holdings through the brokers directly into Direct Option by giving a request to the Fundhouse. At that you would be allotted units at the NAV of the Direct Plan. Another suggestion is to consolidate all your fund holdings in the same fundhouse under a single Folio number. I had a tough experience in managing multiple folios in the same fundhouse.

[MaxTorque]

Originally Posted by dre@ms

Will look out for some Hybrid fund. Sorry for the noob question, but this investment of 2000 is per month or one time.

Yeah, it is every month. Once you are habitual to the stock market fluctuations, you can keep on adding some good funds and build a strong portfolio.

[faustus77]

Originally Posted by nazimk24

Just had a quick glance at Axis's tax saving fund. Robust performance till now (though I'm not clear about what investment philosophy it follows). But I would be cautious about the relatively short time it has been in existence (a highly one-dimension investment process could be tested under a severe downturn).

Also, look at DSP Taxsaver and Franklin Taxshield.

Originally Posted by goandude

I presume you mean Axis Long term equity fund which is a ELSS fund. However, Reliance Tax saver is also a very good 4* ELSS fund and better returns than Axis Long term Equity

Nazimk/Goandude
Hi.
Thanks for your response.
DSP and Franklin have a smaller corpus under management compared to the others. Will definitely look at them specially FT. 1100 + crores is OK
Yes Reliance has surprisingly given an amazing return of 77% . How come it is no 2 on the ratings?
My immediate question is whether to wait for a deep reaction or invest at 25600 sensex index.
Regards

[S_U_N]

Originally Posted by faustus77

Nazimk/Goandude

My immediate question is whether to wait for a deep reaction or invest at 25600 sensex index.

Last month sensex was more than 25000 and I was hesitant as well.
Finally took the plunge and invest lump-sum since I had money piling on.

In just one month, the gain is 7% on both those mutual funds.

Probably I just got lucky?

[sgiitk]

@S_U_N; Same here. However, since I invest on a 10 year time frame, I took the plunge, and am not unhappy!

[dre@ms]

Originally Posted by swiftnfurious

SIP = Systematic Investment Plan which is investing in a steady way for a minimum of 6 months (onwards) like we pay our EMIs.

This is a very good way to invest if we don't have a lump sum to invest initially. The con is that the fund keeps growing (as the market spikes) and by the time next monthly investment comes, the value would have gone higher per unit which means you are buying at a higher price. But for a long term, it should NOT matter.

So that means one month I pay 2k and based on the market, my next month investment would come down or go higher. Am I sensing it right?

Originally Posted by MaxTorque

Yeah, it is every month. Once you are habitual to the stock market fluctuations, you can keep on adding some good funds and build a strong portfolio.

1. One month I pay 2k and the next month should I pay the same or it can be lesser or higher?
2. Any penalty charges if I miss one month payment

[sgiitk]

Originally Posted by dre@ms

So that means one month I pay 2k and based on the market, my next month investment would come down or go higher.

SIP means the same amount every month at the same date. If the units are costlier then you get fewer, if they are cheaper then you get more. In the long term this adds up in your favour.

[S_U_N]

Originally Posted by dre@ms

So that means one month I pay 2k and based on the market, my next month investment would come down or go higher. Am I sensing it right?


1. One month I pay 2k and the next month should I pay the same or it can be lesser or higher?
2. Any penalty charges if I miss one month payment

The payments are automatic - you have to provide a mandate. So, there is no way of missing it, unless you don't maintain sufficient balance.

There are various other methods such as Flexi SIP, Alert SIP, Step Up SIP, and Portfolio SIP: http://www.fundsindia.com/blog/fundsindia-sip

[nazimk24]

Originally Posted by dre@ms

My requirement is long term, but also to tackle unexpected expenses.

Now what is this SIP and if investing less than 5 years, what do you suggest.

As elaborated upon above, SIP is a way to invest via regular monthly payments (also called cost-averaging in personal-finance terms.) You can talk to your agent/fund company to figure out how to set up an SIP.

Originally Posted by dre@ms

So that means one month I pay 2k and based on the market, my next month investment would come down or go higher. Am I sensing it right?


1. One month I pay 2k and the next month should I pay the same or it can be lesser or higher?
2. Any penalty charges if I miss one month payment

You will pay 2k every month (or can choose to tweak the amount). If a payment does not go through because of insufficient balance, the fund company will not charge (though it may cancel the SIP if payments are missed repeatedly). The bank, however, may levy an ECS return charge.

Originally Posted by vasanthjn

The FM has made it very clear in this budget that the indexation benefit will not be available for the debt funds. Hence its a flat tax of 20% on debt funds.

...

Nowadays many Fundhouses allow you to invest Directly online.

The FM's speech did not specify if it will be flat 20 percent or with indexation. For now, the industry is working with indexation. Detailed guidelines will be out soon.

Originally Posted by faustus77

DSP and Franklin have a smaller corpus under management compared to the others. Will definitely look at them specially FT. 1100 + crores is OK
Yes Reliance has surprisingly given an amazing return of 77% . How come it is no 2 on the ratings?
My immediate question is whether to wait for a deep reaction or invest at 25600 sensex index.
Regards

AUM does not really matter in the fund industry; what matters is how and where the manager is investing the money. One of the best equity funds in the industry (Quantum LTE) is only Rs 400 crore AUM.

Ratings are calculated in a complicated way and each agency has a different approach but generally the way it is done is, performance for several different timeframes (2, 3, 5, 10, etc) is taken into account and a composite rating is given basis how the fund fared in each of the periods.

As for whether you should invest or wait for a correction, i'll just use the quote: "Time IN the market is more important than timing the market"

Originally Posted by S_U_N

Last month sensex was more than 25000 and I was hesitant as well.
Finally took the plunge and invest lump-sum since I had money piling on.

In just one month, the gain is 7% on both those mutual funds.

Probably I just got lucky?

Yeah. It could well have been -7 percent. If you want to be successful at equity investing, stop tracking daily/weekly/monthly market movements or its swings will wrench your gut and force you to take irrational decisions.

Remember, one could have invested in stocks/stock funds and find himself making below-FD returns even after three/five years. But invariably, over the long term, you'll come out ahead.

Originally Posted by goandude

I presume you mean Axis Long term equity fund which is a ELSS fund. However, Reliance Tax saver is also a very good 4* ELSS fund and better returns than Axis Long term Equity

Somehow, I will always be apprehensive about how much of a great steward of my capital Reliance will be.

Originally Posted by swiftnfurious

The con is that the fund keeps growing (as the market spikes) and by the time next monthly investment comes, the value would have gone higher per unit which means you are buying at a higher price. But for a long term, it should NOT matter.

This is not a negative, it's the highlight of the SIP way of investing. By forcing you to invest a fixed amount regularly, it prevents you from going overboard and over-investing at higher valuations, as well as forces you to invest during a deep correction and at beaten-down valuations (which is how it should be done) when the normal human reaction out of fear is to run away.

[S_U_N]

Economic times has now a detailed article on the impact of budget on debt funds with good facts and figures (people are pulling out money from these - is that what the Government wanted?)

There are some alternatives proposed as well.

http://economictimes.indiatimes.com/...w/38666003.cms

I am hoping that the government reconsiders their stand pretty soon.

[dre@ms]

Originally Posted by sgiitk

SIP means the same amount every month at the same date. If the units are costlier then you get fewer, if they are cheaper then you get more. In the long term this adds up in your favour.

Originally Posted by S_U_N

The payments are automatic - you have to provide a mandate. So, there is no way of missing it, unless you don't maintain sufficient balance.

Originally Posted by nazimk24

As elaborated upon above, SIP is a way to invest via regular monthly payments (also called cost-averaging in personal-finance terms.) You can talk to your agent/fund company to figure out how to set up an SIP.

You will pay 2k every month (or can choose to tweak the amount). If a payment does not go through because of insufficient balance, the fund company will not charge (though it may cancel the SIP if payments are missed repeatedly). The bank, however, may levy an ECS return charge.

Thanks for all the explanations. Stuffs about mutual fund and investments are slowly unfolding before me. Let me make use of Fundsindia help and will soon decide which one to take for.

[nazimk24]

Originally Posted by dre@ms

Thanks for all the explanations. Stuffs about mutual fund and investments are slowly unfolding before me. Let me make use of Fundsindia help and will soon decide which one to take for.

Also remember to check out Value Research (valueresearchonline.com) and Morningstar India (www.morningstar.in). They're the best resource on MFs you'll find.