Monday, March 29, 2010


Mr.Jagannath Surasgar asked : "i am looking for a pure term ins for my 18 year son. i dont see many companies offering term insurance for this age. most of them have min age at 21. does anyone know who would be doing cheapest term insurance at lowest age?. Shall I go for Free Insurance offered by some Mutual Funds?"

Srikanth Matrubai advises :

Thankfully, you are not thinking of taking a ULIP but a Term Plan.

That's very knowledgable of you.

Yes, it is true that there are not many Insurance companies who provide Insurnace cover for a 18 year old. However, Aegon religare is offering the term plan for age 18. As per your requirement you can check the exact premiem from the company website.

However, since your son is not earning yet, I do not think it makes sense to go for Term Plan. All the Talks ( Insurance is cheaper at Early Age etc.) are misleading to TRAP the Customers.

You may Start Investing for him in any Mutual Fund ( Preferably) wth Free Life Insurance. Many AMCs offer Free Life Insurnace with NIL charges. These are Reliance, Kotak, Birla, DWS, LIC (MF) and UTI.

Among these DWS Tax Saving Fund offers a simple and uncomplicated Term Insurance cover of 5 times your Investment as Life Insurance, subject to a maximum of 5 lakhs.

Birla Century Sip gives you a cover which will be equivalent to your market value of the units you have or 100 times your monthly sip whichever is less.

Caveat : These Mutual Funds have the right to modify the terms of Insurance, especially after the most unethical modification done by DWS Mutual Fund, I have started to have second thoughts on recommending these combo products.

Also, liquidity becomes an issue when you go for these Free Insurance offered by Mutual Funds.

It is always preferable to keep your Insurance and Investments separate.

Don't buy any plan either MF or ULIP with insurance/risk cover attached even if they claim is "free"

Do consult your Financial Advisor before commiting your investment.

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Friday, March 26, 2010


DWS Mutual Fund has murdered the business ethics right under the nose of SEBI and AMFI and no one seems to have taken note of it.

DWS Mutual Fund used to offer free life insurance to individual investors investing in DWS Tax Saving Scheme. In the unfortunate event of the demise of an investor an amount equivalent to five times the invested amount will be paid to the nominee. (i.e. Amount Invested X 5, subject to a maximum of Rs.5 lakhs per investor)

Example: An investor does a one time investment of Rs.50,000 in DWS Tax Saving Fund. If he dies after a period of 3 yrs, then his Sum Assured = Amount Invested X 5 = 50000 X 5 = Rs.2,50,000

This was the offer when you were investing in the DWS Tax Saving Fund. The DWS people changed the Insurance Limit to 2 times of your investment from the original 5 from January 2010.
And, now, in a swift move have KILLED the ethics of Mutual fund business by reducing the Insurnace Coverage from the original 60 years to just 50 years. And the most shocking part of the decision is that this will be applicable to even those investors who have ALREADY invested even before January 2010, citing the most crazy excuse of High Insurance Costs. Probably they are the feeling the pinch of the Zero Entry Load the most, mainly due to the Sky High Salaries and Bonuses they pay to their Mutual Fund people.

I myself have seen many new investors coming to Mutual Funds (instead of Insurance) purely on the basis of this FREE Insurance Coverage upto 60 years.

Yes, DWS People have the right to modify the Insurance part, but just spare a thought to the poor investor who would have NOT taken any Insurance on the basis of his investment in DWS Tax Saving Fund.

The least the DWS could have done was to CONTINUE the Insurance Coverage upto 60 years for EXISTING investors. But, they have gone right ahead and done the most unethical.

I hope, someone from the AMFI wakes up to this and directs DWS people to continue to extend Insurance Cover to at least existing investors upto 60 years.

The move by DWS only goes to further emphasise the point of NOT to combine investment with insurance which makes it a poor investment decision. It makes better sense to opt for pure term plans, which are low-cost insurance and invest the remaining amount in a good mutual fund scheme.
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Thursday, March 18, 2010


A popular saying goes ‘one should save for the winter while some summer is still left.’ It is quite common for young people to postpone their savings blissfully ignoring the fact of the Fascinating effect of Compounding has on your investment. The World's greatest scientest Albert Einstein said "compound interest is the 8th Wonder of the World". There is no magic formula for this. Compounding is in simple terms, re-investment of income on the prinicipal amount. And again the income on the re-investment of income is also re-invested!!! And thus, the impact obviously will be massive and the more time your money has, the faster it multiplies.

But, the general public tend to ignore this and keep on postponing their investment. Let us take a practical example of my client.

Mr.Bharani Kanth asked :

I happy to came across to very useful and informative site.

I am able to settle in my life at the age 30. I am not able make significant investments until now. I need your suggestions in selecting good schemes in the following methods of investment.

1. I want to insure my self upto 30 Lacs using Term Plans.
2. I want to invest in Tax saving mutual funds in SIP mode.
3. Where should I invest if I get any extra money if I get for medium and long term perspectives.

4. I want to save if there is any extra money for short term investments like liquid funds.


Dear Bharani Kanth,
At your age of 30, you should had some kind of investment, at least Term Insurance to start with. Sure, the temptation to postpone and enjoy the money NOW is irrestible, but just see the longer vision. You could have a Wealthy Retirement.

You should start your investments as early as possible. The earlier the better. This gives you the advantage of 'compound effect', rightly described as the 8th Wonder of the World. There is no truth to statements like ‘I am too young to start saving’.


Do you know that if you intend to invest Rs.2000pm and delay the same by just one(1) month, you would be losing Rs.1,90,792!!!! (Calculated @20% for 25 years). And in today's worth of money, you are losing Rs.44,454. Yes, by delaying your Rs.2000 investment by 1 month, you are losing Rs.44,454 in today's worth


Do you know, that if you need Rs.1 Crore in say about 20 years, you need to invest Rs.7535 per month.
For the same Rs.1 crore, if you start investing 5 years earlier, you need to invest just Rs.3628 per month. A huge huge saving indeed.

You can use the following calculators ……………..


Apart from start saving now, , of course, he should be very regular in his saving and should have a definite goal.
To begin with, Take Term Insurance to adequately cover your self. An adequate Life Cover means a Minimum of 5 years of Annual Income and normally 10 years of your Annual Income. Suppose your Annual income is 2 lakhs, you should take a Minimum of 10 lakhs Insurance Cover and if possible, increase to 20 lakhs Insurance. It feels to notice that you are more inclined towards Term Insurance which is the Cheapest way of Insuring your life.

Your idea of investing in Tax Saving Mutual funds through sip mode is a very good one and you can find the best funds to invest in my blog posts.
Where you invest your extra money you get depends whether the money if short, medium or long term.
If it is short term, it is always wise to invest in Liquid Funds.
If it is medium term, it would be prudent to invest in Debt Funds or Balanced Funds.
If it is long term, of course, Diversified Equity Funds are the best avenue.

Best of luck ,
Srikanth Matrubai

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Tuesday, March 16, 2010


The DSP BLACKROCK Mutual Fund people recently organised a Get together for Independent Financial Advisors of Bangalore in a star hotel. The programme was well organised and was hosted by the ever smiling Harsha Bhogle.
Thankfully, the Quiz was not restricted to Mutual Funds but included topics ranging from Cricket, Movies to even Politics.
Harsha Bhogle ensured that there was never a dull moment.
Here are some photos of the event.

Harsha Bhogle was at his wittiest best. See the Video here..........

Yours Truly answered quite a few of the questions posed and Harsha even pulled my leg saying "anyone can answer this question expect Mr.Srikanth".

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Monday, March 8, 2010


Investing in Equity Linked Savings Scheme is the best way of saving tax, as it achieves the twin benefit of Tax Savings and providing benefits of Long Term Equity Investment.

I keep getting hundreds of emails requesting me to recommend me the BEST ELSS fund. It is practically impossible to answer and satisfy each of them.

So, I decided to write my best picks and post them on my blog here. I hope this will help you.


Religare Tax Plan

An open-ended Equity Linked Savings Scheme (ELSS) with a lock-in period of 3 years, seeks to generate long term capital growth from a diversified portfolio of predominantly equity and equity related securities. Its performance has been in the top quartile in the recent past. The scheme has generated a 1 year CAGR of 114.85% while the benchmark indices ‘BSE 100’ rose by 109% during the same period. The fund has outperformed its benchmark in 3 years, 2 years and 1 year period. Even in its short history, the fund has developed the good habit of liberal Dividend payout.

Birla Sunlife Tax Relief 96 Fund :

Has been a STAR performer since its launch. The Fund has been ranked THE WORLD'S BEST FUND by Lipper!!!!

The Fund has had a great Dividend History. Your Rs.1 Lakh investment in this Fund in 1996 would have yielded Rs.21 Lakhs by way of Dividend alone!!! (Add another 70% being paid out on 12th March). Has given an astonishing return of 32.69% CAGR since launch in March 1996.

Sundaram Tax Saver:

Has a portfolio with a mix of Large Cap and Mid cap and is this a bit more volatile than the rest. The Fund is actively managed and is very nimble and thus performed well in the Bear Market of 2008. Its High Sharpe Ratio shows that the Fund's active asset allocation has paid dividends.

HDFC Tax Saver :

The BEST ELSS Fund. Not only does the fund do well in a Bull Market but amazingly even protects your money better in a Down market. Steady and Convincing Long Term Track Record makes this a Must Have even for Non-Taxing Purposes. The First Choice for any Tax Saver wanting an ELSS exposure. Even though the Fund has a large cap bias, it has managed to consistently beat its Benchmark, year after year. In Valueresearch rankings, The Fund has never had a rating of less than 4 Stars since more than 7 years now!!!!!

CanRobecco Equity Tax Saver :

Has had a remarkable turnaround in its forutnes since Robecco's entry. Earlier it showed flashes of brilliance, but that's it. Since 2006 has the fund consistently started outperforming its category and its benchmark. The Fund has a amazing knack of quickly moving into cash in times of market crash and being fully invested during bull runs which makes the Fund very volatile but has good performance to show for the volatility. Aggressive ELSS investors could consider this Fund.

Fidelity Tax Advantage :

The Fidelity Tax Advantage Fund has been a consistent performer since it was launched in 2006. It recently won the ICRA 7-Star Gold Award 2009 in the ELSS category for its 3 year performance till December 31, 2009. Its "value" approach makes it a good fund for all types of investors.

Also read


There are some funds which have given good returns and you could see them recommended by some experts, but I refrained from recommending them. I have given the names and reason for NOT recommending them.

SBI Magnum Tax Gain :

Has had a power packed past, but has been struggling for the past two years. Frequent change in the Fund Manager has had its impact. The Fund has lately increased its exposure to Large Caps and is thus suited for low-risk investors. Its huge bloated Fund corpus could be a big drag on the performance.

Franklin India Tax Shield :

Has been a steady performer since its launch. The Fund's 'safety first' makes it suitable for conservative investors. Definitely not the most exciting ELSS Fund, but it protects your money well.

Taurus Tax Shield :

The Fund has had two very good years and should have straightaway made it to the list of recommended funds, but .....BUT its volatile past and relatively high exposure to mid-caps make this fund a High Risk High Return Fund and could be avoided.

Sahara Tax Gain :

Has been very impressive both in the short term as well as the long term. But its tiny AUM should be a cause for concern and you can avoid at this point till there is some semblence of inflows into the fund to give comfort in terms of AUM.


Never go for Dividend Reinvestment Plan in ELSS because by this The Fund assumes you are making a Fresh investment whenver your Dividend is reinvested and thus is locked for a further period of 3 years. Either opt for Growth or Dividend Payout.

For HNIs and those having liquidity constraints, it is wise to opt for Dividend payout option. Even though, Mutual Funds dividends (unlike Equity Share dividends) give back your own money to you, here, since your money is locked for 3 years, it would be prudent to get back some part of your capital. It would also ensure that you get Full Tax benefits without investing the full amount of Rs.1Lakh.

Ex:- Suppose you invest Rs.1 Lakh in Birla Sunlife tax Relief96 whose NAV is 80, you get 1250 units. Now since dividend is announced at 70% (7 per unit), you get back, Rs.8750/-. So, in effect, on a investment of Rs.91250, you still manage to claim Tax Rebate of Rs.33990. This is just an example, some funds even have a dividend yield of above 10% and some Tax Funds (Religare, Sundaram) even declare dividends more than once in a Financial Year.


Best way to invest in ELSS is through Systematic Investment Plan(SIP). With SIP you can invest a small amount every month for a specific time period. With SIP investor can take advantage of fluctuations in the stock market. So investor will get more units when the market is down and get less units when the market is up.

Instead of simply putting in a chunk of Rs 1 lakh at the end of each fiscal year, if you develop a healthy saving habit,you could invest a fixed amount every month and benefit from the advantages of both SIPs and the tax rebate.

When you invest in ELSS, through the SIP route, you enjoy the multiple benefits of better market-linked returns in the long run, rupee cost averaging and a tax break. So, happy investing!

For the other articles on ELSS funds, click here and get all the details.


Srikanth Matrubai

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Sunday, March 7, 2010


sushant from Goa

Hi ,
I want to start SIP for some ELSS fund over the next 9-12 months. Please suggest me some good ones. I have my list. Please comment on any additions/deletion:
1) Sundaram Tax Saver
2) Principal Personal Tax Saver
3) Magnum Tax gain


Dear Sushant
It is always a great idea to invest through SIPS. SIP investing is a no-brainer. 9 out of 10 times, you make more money through a SIP investment than through a Lumpsum Invesment.
The next thing to consider is the Fund itself.
My personal favourite has been Religare Tax Plan and HDFC Tax Saver, especially for the fine ability with which both the funds have been able to outperform their peers even in a Bearish Markets.
HDFC Tax Saver has had a great history and a Fund Manager with the highest experience in the entire MF industry.
Sundaram Tax Saver and Fidelity Tax Advantage too are good and have a had a decent track record, but if it is only 1 Fund which I had to choose, then it would be HDFC Tax Saver.
Magnum Tax Gain, even though it has bounced from a disappointing performance in recent times the huge AUM makes me avoid the Fund for now.

Srikanth Matrubai

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Monday, March 1, 2010



Jagdish Kumar asked :
Dear Sir,

I need suggestion for Below funds, i m planning to start sip for Rs. 8000-10000 in below 2 or 3 funds. Pls help in choosing the best performing funds in future.

Shortlisted Funds:
1) Reliance Growth Fund
2) Reliance Banking Fund
3) Pru. Icici Infra Fund
4) Icici Focused Equity Fund
5) Templeton India Enquity Fund
6) Franklin Asian Equity Fund
7) Franklin Bluechip Fund
8) DSP BR Top 100
9) HDFC Top 200
10) Reliance Vision Fund

Pls kind choose the best from these above 10, & kindly advice & help me for creating a good portfolio for Future. As i m looking at 2 yrs SIP for chosen funds once suggested from yourside.
I want the BEST fund to invest which will perform in all seasons and also tell WHEN is the Best time to invest. In short, is there any fund which any new investor can blindly invest???

Thks in advance and waiting for your comment on above investment.



Dear JK, First of all please understand there is no such thing like THE BEST FUND TO INVEST.
One should try to invest in good funds not in the best fund of current time. Because leadership positions may be changed very quickly.

Today`s winners may become losers & today`s losers may become winners tomorrow. Fund performance keep fluctuating and other than Stock Performance, factors like change in Fund Manager too affect the performance of the Fund due to the Fund Manager`s change in strategy, etc. (Remember JM's super performance in 2007-08 and the super dud show thereafter??)
You may be surprised to know that the None of the Top 10 Funds of 2008 made it to the list in 2009!!
However, what I can suggest you is to invest in those fund which has been consistent in all Market Cycles and is more of `no surprise` fund rather than a spectacular performer in a Bull market and a Super Flop in a Bear market.

There are very very few funds which can fit into the category of a Dream Fund, the one which you can invest either in Peak of the Bull Run or the nadir of a Bear Market. Consistent above average performance across market cycles is the key here. Sure, there will be a few hiccups here and there even in the Best of Bests., buy you have to digest and let the fund perform to its maximum capability. My selection of 'All Weather Funds' are as follows:
HDFC Top 200 Fund
HDFC Prudence Fund
Reliance Growth Fund
Reliance Regular Savings Fund - equity
Sundaram Select Focus Fund
SBI Magnum Contra Fund
(inspite of frequent change in Fund Managers, the fund has managed to carry on its good works)
DSPBR Equity Fund
Fidelity Equity Fund

See these links

The funds I have shortlisted do have long history of picking long term winners and have earned consistent returns over time.
The above fund shortlisted is not the 'one size fits all'., but you can make these funds as 'core' of your portfolio and add further depending on your profile.

Without going through the routine of explaining, I will be straightforward and tell you in the face…………….Anytime is the BEST time to invest.
Surprised??. Yes, even if you started invested right at the peak Sensex levels of 21000, if you have had invested through SIPs, even now, when the Sensex is down by more than 20%, still you would be in PROFIT!!!! SIP investment ensures that you 'automatically' time the market and also gives the added advantage of Rupee Cost Averging.

You can invest in any above funds depending on your risk profile and objectives. For you Rs.8000-Rs.10000 investment, from your list of funds, I suggest you to consider
HDFC Top 200 fund
Reliance Growth Fund.

Outside of your list, you may consider
fidelity Equity fund
HDFC Prudence Fund
Mirae Asset India Opportunities Fund
Sundaram Select Focus Fund.

Do go for sip and invest in different dates to take advantage of volatility.
Best of luck,
Srikanth Shankar Matrubai

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