Friday, February 19, 2010


Mr.A Tripathi from Lucknow wrote :
Dear Sir,

I am an unsecured job profile 39 years old man with 2 sons. one is 14 years and second is 8 year old. Now days conditions permit me about sip investment Rs.5000/- per month for 3 years. please give me fund names with monthly investment amounts.
I do not mind being Aggressive Equity Funds.


A Tripathi , Lucknow.

Dear Mr.Tripathi,
For your job profile, a Full Fledged Aggressive Equity Oriented Portfolio will not do. Aggressive Funds are very volatile and risky in nature. With an unsecured job, you may not only be in a position of not being able to fulfill your sip commitments but also need to withdraw your investments at a short notice. Such being the circumstances, Aggressive Funds are ruled out.
You need to strike a balance between safety, liquidity and returns. Hence, you are better off having some debt exposure to provide stability to overall portfolio. Balanced Funds would be the apt choice for you.
Before going for these investments, insure yourself adequately with Term Insurance. Then you need to protect your family from financial insecurity due to sudden illness and thus a Health Insurance becomes inevitable. I hope you also have provided adequately for the Education Expenses of your two sons. You need to consider all these things and only thereafter go for the Mutual Funds Investments.
Preferably go for Large Cap Funds and Balanced Funds.
You can consider investing in the following way.
Birla Sunlife Frontline Equity Fund = 1000 *1 per month
Fidelity Equity Fund = 500 * 1 per month
HDFC Prudence Fund = 500 * 2 sips per month
HDFC Top 200 fund = 500 * 1 sip per month
Religare Business Leaders Fund = 500 * 1 per month
Reliance Regular Saving Fund(Balanced) = 500 * 2 sip per month
Sundaram Select Focus Fund = 500 * 1 sip per month

In Reliance Regular Savings Fund, you are advised to go for 2 sips in 2 different dates.
The Above Funds will ensure that you have sufficient exposure to Large Caps, Diversified Funds and Balanced Funds. I have avoided Debt funds, since you seem to be aggressive. Balanced funds will lend enough stability to your overall portfolio.

In the above list, you go for Birla Sunlife Frontline Equity Fund, invest under Century SIP to take advantage of Free Life Insurace which is an added benefit, especially since you seem to be underinsured.

Best of luck,
Srikanth Matrubai

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Sunday, February 7, 2010




Retirement is a fact of life and is inevitable.

One day everyone needs to face the 'retirement' question. Are you ready for it?? Is your financial plan working towards it??.

It is equally essential that your Retirement planning not only factors in volatility and income shortages but also factors in Inflation and thus a plan should be such that your cash flow will support your retirement lifestyle.


The Basic Priority should be to have enough 'Emergency Cash' which will cover your immediate needs in case of job loss, etc. It is ideal that your 'Emergency Cash' covers between 3-6 months of your normal expenses.

You also need to plan for your children's education, marriage, home. All this will mean lesser and lesser amount for your retirement savings and that's precisely the reason for starting to save early.

Read this article, it may help you....


Next comes the insurance. Have you covered your life adequately??

Take the Human Life Value calculator to zero in How much Insurance you need.

The Thumb Rule says, if you have kids, you need to have 10 times of your Annual Income as your Insurance Cover.

Insurance is NOT Investment. Hence, avoid ULIPs and go for Term Insurance Policies. Use Insurance as a Security to cover the risk of Dying Young. Insurance is a tool which protects your dependants from financial ruin in your absence.

Along with Life Insurance, you need to have adequate Health Insurance. Your current income and savings may not be enough to sufficiently fund against Medical emergencies. This is where Health Insurance steps in.


The basic thumb rule says that you need around 75% of your current expenses to maintain the same standard of living (adjusted to inflation). This is just half the picture. The picture is complete only when you guess(that's the only word I could zero in) how many years you will live after retirement.

Again Indian Life Expentancy average is about 75-80 years. So, now you can start planning.

You can also use the Human Life Value Calculator like the to calculate how much Insurance you need.

You can also use the following Retirement Calculators


Starting saving early ensures that you have the time ti ride out the stock market volatility and thus you are in a position from the '8th Wonder of the World' the "Compound" effect. The younger you are, the fewer are your financial obligations, leaving you with higher surplus to invest.

Do you know, if you delay your SIP investment of Rs.5000/- by just 1 month, over a period of 25 years at 15%, it would cost you (hold your breath), Rs.1,64,595/-!!!!!!.

You would lose Rs.38,350/- in today's worth of money.

Investing for Retirement should start from the day you start earning.


Investing in the right Asset Allocation will also ensure the merits of diversification and mitigating risks but also beating Inflation. Remember there are so many investment avenues eyeing your money, it is sure to confuse even a well informed investor. Gold, Real Estate, Insurance, Mutual Funds, Equities, PPF, NPS the list goes on.

DO NOT KNOW WHAT 'NPS' IS...Click here

Indian mentality is swayed by words like 'GUARANTEE' AND 'PENSION'.

Don't Purchase any Pension Plan of any Insurance Company under any Circumstance!! WHY?? These Plans have High Allocation Charges, Admin Charges, Very LOW returns on Annuity. Your Pension is based on your Corpus. With Insurance Plans, your Corpus is limited.

Invest in Good Diversified Mutual Funds which are regularly recommended by me in this blog. With this, you will get a very high Corpus at the time of retirment. After Retirement, you can opt for Systematic Withdrawal Plan (SWP) and receive Pre-determined amount every month.

Equity does not mean just 'equity funds' per se. Invest in different investment style of equity funds which fit into your overall asset allocation strategy. The younger you are, the more equity oriented your investment should be.

You can choose to invest in the funds recommended in this blog regularly.



At least once a year, religiously review your entire Investments and Re-balance. Moreover, your needs will change with time and the rebalancing will cover this aspect.

The Worst time for a Market to get into Downturn is when you are about to retire!!! As you near your retirement, it is prudent you change your portfolio from a equity-heavy to debt-heavy portfolio.


Planning for retirement isn't just about how much money you can accumulate — it also looks at how you use those funds during your retirement.

The 'Accumulation' phase is over. The "Decumulation' phase starts.

Don't overinvest in Bonds and Debt, they may actually fail to beat inflation and your purchasing power erodes substantially in front of your eyes.

You should go for a combination of Balanced Funds, Monthly Income Plans, Fixed Maturity Plans, Arbritrage funds and Large Cap Funds and also look at investing in Senior Citizen Scheme (split them, to avoid penalty in case of early closure., as only will be closed at a time).

Also you could also decide how much cash flow you need now, how much you can postpone, how much you may need after 5, 10 years hence; this amount can be invested in MIPs and Conservative to Moderate Balanced Funds. Strike a balance between safety, liquidity and returns.

You can also look at Reverse Mortgage to augment your retirement income.


Investing and financial planning needs a lot of time, attention to detail, research and paper work. For someone with a busy schedule, it’s too much trouble. Working with financial adviser is a great way to adequately plan for retirement. They can work with you to create a plan and build a portfolio that fits your needs and goals, and is designed to sustain you for the long haul.

What I have given is not a One size fits all Formula. But this is a starting map for you and your Financial Advisor can take it up from here.

Finally remember, if we fail to plan then we plan to fail

Best of luck,

Srikanth Matrubai

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