POSTED BY January 2, 2014 10:51 am COMMENTS (11)
ONHi Jago investor team,
I have invested the below ELSS MF in the year 2007- 2008. Since they were purchased without much knowledge on the product and invested purely based on the investment made by other friends and just to save tax.
Mutual fund | Purchased on | Invested amount | Units | Current Value |
BIRLA SL TAX RELIEF 96 (D) | 28-01-08 | 10000 | 70.552 | 6072 |
HDFC TAX SAVER (G) | 29-01-08 | 10000 | 54.706 | 14027 |
Principal Personal Tax Saver | 29-01-08 | 11000 | 59.34 | 6183 |
Principal Tax Savings | 29-01-08 | 10000 | 87.078 | 8018 |
SBI Magnum Tax Gain (G) | 29-01-08 | 20000 | 283.888 | 20374 |
Sundaram Tax Saver (G) | 29-01-08 | 10000 | 244.663 | 11905 |
Total | 71000 | 66579 |
Now when I am checking my portfolio, I am eager to withdraw my amount from these ELSS and want to pay the amount of almost 70000/- in paying the EMI of Housing Loan.
Would like to know your suggestions whether to continue the above MF or withdraw amount from ELSS.
Kindly revert for your suggestions.
Regards,
Sandeep Jain
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Hi Ashal,
Thanks for your example. Yes, now it gave me the correct understanding on how it works.
Regard,
Sandeep
Dear Sandeep, Let’s assume your fund’s NAV is 20 Rs. and it declares 2 Rs. deividend. So post dividend the value of your unit ‘ll be 18 Rs. and 2 Rs. as dividend is already in your pocket that’s making it 18+2 = 20 Rs. the original NAV for your Units.
So how does it matter that you are redeeming before dividend or after dividend?
Thanks
Ashal
Hi Ashal,
Thanks for your quick reply, As i said i m very poor at these concepts and ivnested purely with out much awareness.
It really helpful, if you can share a small and simple example.
Thanks for your help as usual.
Kindly revert.
Regards,
Sandeep
Dear Sandeep, post dividend declaration, the NAV ‘ll fall to adjust dividend amount from corpus. So how ‘ll you get the benefit if any, you have in your mind?
Thanks
Ashal
Hello Friends,
Just a small query, i have BIRLA SL TAX RELIEF 96 (D),which normally gives dividend in the month of March every year, so shall i wait to redemp this MF (because of Dividend) and rest all i m planning to redempt in the current month itself.
Just need your advice.
Regards,
Sandeep
Dear Rahul, in case of loans, it’s more about emotional aspect rather than financial one. Instead of forcing on financial thing, I w’d let the person to be in comfort on emotional part as partial loan amount has been paid back.
Thanks
Ashal
Hi Ashal/ Rahul,
Thanks for your suggestions. It really helps me to take the decision on my investment.
Regards,
Sandeep
Hi Ashal,
This is another example why people who have liabilities (and are salaried) should avoid capital market.
Hi Sandeep,
Couple of years back i was also in same dilemma. The best option is to prepay. Reasons are as below-
1. For home loan you have to pay interest around 10%
2. There is no guarantee of returns in MF.
You should not think about stock market till you reduce the outstanding loan amount significantly. Observe the market carefully (assume as if you have invested), get knowledge and after few years, you can again think of investing in market.
Thanks,
Rahul
Dear Sandep, if the idea is to repay principal amount of loan, please redeem all and repay.
thanks
Ashal
Dear Sandeep, why are you not paying your EMI from regular income?
thanks
Ashal
Hi Ashal,
Thanks for your prompt reply. Currently i m paying my EMI from regular incomes only, but looking after the income/ Surplus generated from MF of ELSS category, i would like to go for paying my Principal amount of Loan rather than keep invested. Atleast it will reduce my either period/ EMI’s in future.
This because if you compare the current value of my investment with other peer they are nowhere compareable i mean returns are very very poor.
Please suggest, whether i am on the right track.
Regards,
Sandeep