Monday, January 12, 2009

31 yr old's investment dilemma

Hi,
First of all thank you very much for your advices on the
goodfundadvisor blog. Please give me some suggestions to improve my
port folio
Before going further, I request you not to post my email id on your
blog. You may post the content of the mail but not mail id.
I am 31, working in IT field in an MNC in bangalore.
My dependents are wife and kid. My parents have their own house and
they can manage with pension.
My investment goals are to have better life after retirement, children
education.
I am very new to Mutual funds and shares. I just started investing in
mutual funds.

Please comment on my following portfolio:

Earlier investments:
LIC endowment policy with premium Rs 9000 pa since 2001
LIC retirement policy with 10000 premium pa since 2004
LIC policy for my kid with 13000 Rs pa since 2006
Invested in Land for 20 lakhs
Bought gold ow worth 2 lakhs in 2007
Bought house with home loan 11.5 lakhs and principal 7.5 lakhs still
pending paying monthly EMI around 10000 Rs

Recent MF investments
SBI Tax Advantage Sr-1 (D) 31 march 2008 with Rs 40000
SBI Magnum Multiplier Plus (G) 22 july 2008 with Rs 20000
 


HDFC Growth Fund (G) 14th july SIP with Rs 2000 per month
Kotak Opportunities Fund (G) 14th july SIP with Rs 2000 per month
Reliance RSF - Equity 14th july SIP with Rs 2000 per month
SBI Magnum Contra Fund (G) 14th july SIP with Rs 2000 per month
Tata Infrastructure Fund (G) 14th july SIP with Rs 2000 per month

I want to invest some more money in MFs around another 10000 per
month. Please suggest some good funds, SIP / lumpsum.
Do I need to buy any shares also?
Do I need to buy some ULIP?
--
Regards,
Sridhar



SRIKANTH SHANKAR MATRUBAI's reply::::

Dear Sridhar,
At such an young age of 31, you have done a fair job of managing your finances. Congratulations.
As you may already be knowing, I am in favour of only Term Insurance. Insurance is NOT an investment. So, it does not feel good to see 3 LIC policies. But you have already taken them, so continuing the same is the best option.
Regarding your investments in Gold, buy Gold only if you are actually consuming(using) it. If it is for investment purposes, then it is not a good decision, you are better off investing in Gold ETFs or Gold Mutual Funds.
You already have a house and have invested in a land. so I persume that you do not any BIG expenses facing you in the next decade or so. So, you can safely go for Long Term Investment without short term bother.
Both your recent MF investments could have avoided. I mean, it could have in much better schemes. Because SBI Tax Advantage is a close-ended, that 10 year close ended!!
Your existing SIPs are
HDFC Growth Fund (G) 14th july SIP with Rs 2000 per month
Kotak Opportunities Fund (G) 14th july SIP with Rs 2000 per month
Reliance RSF - Equity 14th july SIP with Rs 2000 per month
SBI Magnum Contra Fund (G) 14th july SIP with Rs 2000 per month
Tata Infrastructure Fund (G) 14th july SIP with Rs 2000 per month

All the above are very good investments especially since you are a long term investor. But keep reviewing your portfolio every 6 months or so, especially your invesment in Tata Infrastructure Fund and Reliance RSF - Equity Fund.
For your further 10000 sip, I would like you to go for 4 large Cap Funds and 1 Balanced Fund. My recommendation would be
Birla Sunlife Frontline Equity Fund (go for it through Century SIP and you will get additional Free life Insurance)
DSPML Top 100 Fund
Fidelity Equity Fund
HDFC Prudence Fund
Reliance Growth Fund (here also, you will get Free Life Insurance).

One more suggestion, stop the sip in Kotak Opportunities Fund immediately. Reinvest, i.e., Start fresh SIP in the same fund under Kotak Star Kid Facility for your kid, and you will get Additional Free Life Insurance!.

You can also stop Reliance RSF sip, and go for the Reliance Growth Fund. With 2000 savings, you could invest in either DSPML or AIG World Gold Fund.

You can think of investing in shares. But its a different game altogether. You need to spend more time tracking and monitoring your stocks, which is not the case with your investment in Mutual Funds.

Avoid ULIPs at all costs.
Best of luck,
Srikanth

Also visit http://equityadvise.blogspot.com for an indepth Equity Analysis

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