Balanced fund for new investor

POSTED BY Jatin Kacha ON September 1, 2012 6:09 pm COMMENTS (9)

Hi,

I have decided to begin SIP in balanced fund.
I look at HDFC Prudence or HDFC balance. They seems to be good.

Then can you advice me which is good balanced food for new investor like me.
For a goal, i have decided to have time frame of 3-4 years.

Apart from that, i will be investing few amount in gold fund as well. For that i don’t have demat, so i will do SIS in any gold saving fund.

So is this investment decision good enaugh?

9 replies on this article “Balanced fund for new investor”

  1. Jatin Kacha says:

    Ashal,

    Thanks for reply.
    Let’s say i have gone with MIP with growth option, not dividend payout, as i wanted to accumulate a fix amount. When i have reached to my figure, i will come out from MIP, and sell it. Then at that time, whatever earning i have made, will be applicable for tax. Isn’t it?

    1. Dear Jatin, yes the earning ‘ll be taxable but it’s not wealth tax. It’s capital gains tax. if your period of holding is more than 1Y, the gains ‘ll be taxable either 10.3% flat rate with out indexation or 20.6% with indexation.

      Thanks

      Ashal

      1. Jatin Kacha says:

        Ashal,

        Actually sorry for using word “wealth tax”. I should be using capital gain tax.
        That is the point of concern, then it seems somewhat equivalent to FD’s return.

        Anway, thanks for your feedback, it make me to learn new things.

        1. Dear Jatin, if you are in 10% tax slab, then only FD returns can be compared with debt funds. For higher Tax slabs, Debt funds ‘ll beat FDs comfortably.

          Thanks

          Ashal

  2. Dear Jatin, If your time frame is 3-4Y, I w’d like to be on conservative side & ‘ll ask you to invest in MIPs where Eq. exposure is limited to 20-30%. If you can take the risk head on in a balanced fund due to that more than 65% Eq. you may invest in either of the 2 funds mentioned by you.

    Thanks

    Ashal

    1. Jatin Kacha says:

      Ashal,

      Thanks for the reply.
      You suggested to go with MIP, but income received through MIP wont attract wealth tax?
      As per my knowledge it does.
      And regarding balancing risk, that’s the reason why i decided to invest few amount in gold as well.
      What do you say?

      1. Dear Jatin, are you talking about general tax liability on redemption of Debt funds (in the given case MIPs) or exclusively wealth tax?

        From where did you get this info for wealth Tax?

        Please share your info.

        Thanks

        Ashal

        1. Jatin Kacha says:

          Ashal,

          See the following post, “Taxation of MIP’s”
          https://www.jagoinvestor.com/2011/01/monthly-income-plans.html

          For short term, that is added as part of my income.
          But for long term, as in my case more 1 than yr. the income received from fund is taxable at 10/20%, subject to indexation i choose.

          Am i misunderstanding anything?

          1. Dear Jatin, thanks for sharing the link. But my dear friend, where is Wealth Tax in it?

            The income from MIPs ‘ll be classified as either S(hort) T(erm) C(apital) G(ain)/L(oss) or L(ong) T(erm) C(apital) G(ain)/L(oss) based upon the period of holding if you are selling your holdings.

            In case of dividend, the same are tax free in your hands. Now do tell me where is wealth tax?

            Thanks

            Ashal

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