Thursday, April 23, 2009

Heavy loss In Tax Funds


Fig wrote :


I have made heavy investments in tax saving mutual funds as part of my tax planning
in last 2 years. They are as follows

2007 -
SBI Magnum Tax Gain Dividend - 35,000/-
HDFC TaxSaver Dividend - 30,000/-

2008 -
SBI Magnum Tax Gain Dividend - 42,500/-
SBI Tax Advantage Sr-1 Dividend - 15,000/-

2009 -
SBI Magnum Tax Gain Growth - 8000/-
Sundaram BNP TaxSaver Growth - 5000/-
5 year FD @ 8.5% under 80C - 37,500/-

Actually I have realized LATE that there was not much difference in NAVs of these MFs when sensex
was @ 7k and now when it is @ 9k. Thus I should have invested in MFs instead of 80C FD.

Now that I have Rs 4.5 Lakhs parked in fixed deposits, I am thinking of investing small part of
it in order to cover up losses.
Please advice how do I go about investing in order to COVER UP by 50% losses in MFs over last
2 years.

- debhalwa


SRIKANTH SHANKAR MATRUBAI replied :

Dear Debhalwa,
Better late than Never. There is no point in investing in FDs just to save taxes. Inflation will eat your returns.
You seem to taken a liking to SBI Funds and have invested more than 65% in them. Too much exposure to 1 Fund/ Fund House is always fraught with Risk. Invest your Fresh Investment in Funds other than SBI. Either way, SBI Funds have been underperforming the market and their peers.
For ELSS, you can consider Fidelity Tax Advantage Fund and Sundaram Tax Saver.
These may to some extent help you in covering up your past 2 years losses.
However, you have very little option than to wait.
By the way, always consider investing through SIPs rather than a One time investment.
Best of luck,
Srikanth Shankar Matrubai



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