Monday, March 16, 2009

SIP to continue or NOT

SIP to continue or NOT
Mr.vikas wrote :
Hi there

Got your contact on Good fund Advisor and need your views on my investment thru SIP as below


1. SBI Contra --10000

2. Reliance Growth --10000

3. UTI --10000

4. Reliance Diversified --3000


I have been in this investment since September 08.Would it be advisable to continue with the SIP or withdraw to avoid further losses.The funds overall have lost almost 35-40%.

I am told by various colleagues that we must stop (without encashing) and invest money in a Fixed Deposit.

I do not have a problem of waiting for 2-3 years but need to get a professional guidance on which is a better option to move ahead

Cheers

Vikas Milhoutra

SRIKANTH SHANKAR MATRUBAI advised :

Dear Vikas,
True, you have lost money, but you are not alone, whoever has invested has lost in the Bear market. Your funds seem to be good and there is no reason why you should not continue with the same. You have not given as which fund in UTI, your sip is going. It would have made my job easier.
With your horizon of 2-3 years, these funds should give you returns MORE than Fixed Deposits. Whoever advised you to stop this Sips and invest in FDs need a lesson on how Inflation and Taxes eat away your FD returns. You are better off investing in Mutual Funds through SIPs.
You do have good set of funds (I am counting only 3, as I do not know which UTI fund you have invested in), however, you do need to have a Good Solid Large Cap Fund to compliment your existing portfolio. For this, you can look at
Birla Sunlife Frontline Equity fund
DSP Blackrock Top 100 Fund
HDFC Top 200 fund
Sundaram Select Focus Fund

among others.

Either you add another 10000 monthly to any of the above funds, or reduce your existing sip from 10000 to 5000 in both SBI Contra and Reliance Growth and invest the saved 10000 in the above fund.

Best of luck,
Srikanth Shankar Matrubai


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

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