How to choose mutual funds for doing investments for the first time ?

POSTED BY tulasiram ON March 1, 2014 3:42 pm COMMENTS (25)

I am 31 years old,  I am planning to invest ₹5,000 per month through SIP’s in mutual funds. I have not invested before in mutual funds or equities. So please advise me the funds to choose (which gives good returns). The other investments which I am already doing are: Paying Rs.100000 towards PPF every year and also opened a recurring deposit account for Rs.20000.00/ month. This RD a/c is for my home loan principal part prepayment. I have taken a home loan of 20 Lakh, I have prepaid Rs 4 Lakhs last year.

Thank you.

25 replies on this article “How to choose mutual funds for doing investments for the first time ?”

  1. ashalanshu says:

    Dear Tulsiram, please make sure you are investing in Direct fund. No you need not to pay anything.

    Thanks

    Ashal

  2. tulasiram says:

    Ok Ashal,

    Thank you so much.

    Will invest in Franklin India Bluechip fund, I have spoken to the sales executive of the Franklin Templeton, he said he will come to my office on wednesday to collect these documents, one photograph, Pan Card Xerox and one cheque leaf for KYC procedure.

    Just wanted to know, do I need to pay any charges now? like processing fee etc..

    Thanks,
    Tulasi Ram

  3. ashalanshu says:

    Dear Tulsiram, you may invest in Franklin India Bluechip fund growth option direct plan and Quantum Long Term Eq. fund growth option.

    Disclosure – I’m investor in both the funds mentioned above in my personal capacity.

    Thanks

    Ashal

  4. tulasiram says:

    Hi Ashal,

    What fund should i choose for long term investment 20 years :- Birla Sun Life Top 100 Fund (G) or Franklin India Bluechip fund growth option?

    Please help. thanks

    Regards,
    M.Tulasi Ram

  5. ashalanshu says:

    Dear Tulsiram, for life insurance, please purchase individual life insurance policies (better called as Term covers). For disability insurance, please purchase personal accidental plans from general insurance companies.

    The cover amount for life insurance should be at least 10-15 times of your yly income.

    Thanks

    Ashal

  6. tulasiram says:

    Hi Ashal,

    Yeah, I understood. I would now plan and cover myself and my wife with adequate sums individually/jointly.

    Just want to know – does insurance, cover partial and or full disability?

    Suggest me some good single insurance plans which cover me and my wife both without the exceptions like above. And also, help me on how much cover should we both take?

    Thanks & Regards,
    Tulasi Ram

  7. ashalanshu says:

    Dear Tulsi, just like you don’t need Term cover, similarly you should not purchase health cover? That was my counter query.

    Thanks

    Ashal

  8. tulasiram says:

    Hi Debojyoti,

    Thanks for your suggestion, will plan and take a Life Insurance accordingly.

    I don’t know under which section of the Income Tax it will fall, but these are perquisites given by my organization to employees, Medical, Telephone, Professional development, LTA (leave travel allowance) Car Fuel, maintenance and driver bills, Insurance, repairs are eligible amounts reduced from the Flexible Allowance component paid to us every month and hence are not taxable. A deduction from my Gross Total Income for computing income tax.

    Coming to Medical Insurance, I have paid this amount as a top up for the existing Group Medical Insurance which is provided by my organization.

    Hi Ashal,

    This is a top up for the existing Group Medical Insurance which is provided by my organization.

    Thanks & Regards,
    Tulasi Ram

  9. ashalanshu says:

    Dear Tulasi, why did you purchase that health cover at all?

    Thanks

    Ashal

  10. Debojyoti Das says:

    Mr. Tulasiram,
    Your assumption I think is wrong where you said that your Life cover is not required as your wife is working currently. I believe you both equally need to take and cover yourself with adequate term covers individually. Ideally term cover should be 10 times of your current CTC, but again it depends on your lifestyle as well. Therefore, please take this into account and select accordingly and purchase term cover.

    I would be interested to know from you under which section of Income tax “Telephone and Internet bills” which has been provided either by self or by employer is considered as exemption for IT. Can you please provide the required section please.

    For Medical insurance, please provide more details of how much cover you have for which you provide premium of 10K. Also, if this is Family floater or individual policy.

    thanks
    debojyoti

  11. tulasiram says:

    Hi Ashal,

    This is regards to tax saving/planning,
    1) I am paying PPF of Rs.100000/- yearly 2) A home loan on which I can claim Rs.150000/- on interest
    3) One life insurance yearly premium for Rs 10.256/-. 4) A health insurance yearly premium Rs.10000/- . 5) On Medical bills, Telephone and Internet bills I am claiming Rs.15000/-. So can you suggest me some more good investment products where I can claim tax exemption. And how helpful are those products to have.

    a) The above said investments which I have done are right investments?

    Thank you.

    Regards,
    Tulasi Ram

  12. tulasiram says:

    Hi,
    My wife is a bank employee. No kids yet. So I was thinking that I don’t need a life cover now. When it is about tax saving, I have PPF for Rs.100000/- which can be shown under Sec 80c. So please guide me. 1) Does it really require for me to have a enough cover? If so, how much cover should I have.
    2) There is already one Insurance from my employer side.

    Thanks,
    M. Tulasi Ram

  13. ashalanshu says:

    Dear Tulsiram, why are you not purchasing enough term cover for yourself first before cancelling the policy.

    Thanks

    Ashal

  14. tulasiram says:

    Hi Ashal,

    Thanks for suggesting these funds.
    I have only one Insurance policy that is from LIC. Sum Assured is Rs 200000.00. Policy Name: Jeevan Surabhi. Policy Start date: March 2006. Yearly premium: 10256.00 . Now I am thinking of closing this policy. I feel paying Rs.10256.00 towards this policy is of no use. So I am thinking of investing this amount in another product (not in Insurance), what is your opinion, should I continue paying this ? If not, what is the procedure to close this one.

    Thanks,
    Tulasi ram

  15. ashalanshu says:

    Dear Tulsiram, for long term means 20Y, I w’d suggest Franklin India Bluechip fund growth option. For 3Y goal I w’d suggest Franklin India Low Duration fund.

    Thanks

    Ashal

  16. tulasiram says:

    Hi Ashal,

    Yes, I agree.
    These are two RD a/c’ s of Rs.10, 000/- each and there is a gap of 6 months between these two accounts. So I thought any day I will have at least Rs 60,000/- in account.
    But anyway, thanks for your idea. I will surely rethink and re- plan about repaying the principal monthly.
    Thank you very much.
    Ashal,
    At the same time can you please suggest me two good mutual funds. One for a long term investment, (i.e., for my retirement corpus) and the other fund is for short term income (3 years), I will invest Rs5000/- in each every month.

    Thanks
    Tulasi Ram

  17. ashalanshu says:

    Dear Tulsiram, if this money is meant for emergency, you should not use it for prepayment at all.

    Thanks

    Ashal

  18. tulasiram says:

    Hi Ashal,
    My father is a retired Railway employee. He has submitted Form No. 15C to the bank to avoid tax on deposits.

    Hi Viren,

    Yes, I agree on what you both said.
    The one reason why I have chosen this option is – the RD amount can be withdrawn at any stage for any kind of urgent financial emergencies. But if I pay this amount towards the part principal monthly, I will be left with no money in hands in need.

    Thanks,
    Tulasi ram

  19. Viren Phansalkar says:

    Hello Tulasiram,

    Irrespective of your father being in tax bracket or not, isn’t what you get from RD is less than what you pay in Home loan?

    Being a senior citizen, your father may earn 0.25-0.5% more on RDs, however, home loan may be at 11.4% (SBI) and RD may be around 9.5 …. Still home loan wins…..

    So Ashal’s suggestion makes sense …. pre-tax, post-tax, senior citizen or no senior citizen….

    Thanks,
    Viren

  20. ashalanshu says:

    Dear Tusiram, you mean to say your father is out of tax net?

    Thanks

    Ashal

  21. tulasiram says:

    Hi Ashal,
    Yes, I agree to pay Rs.20000/- today is more beneficial.

    Sorry I have not stated before, I have opened this RD A/c in my father’s name, so to earn higher interest (senior citizen interest).

    Ashal, so how should I go about it ? Please guide me.

    thank you.

  22. ashalanshu says:

    Dear Tulsiram, let me put a question to you. Paying 20000 Rs. today is beneficial or after 12 months?

    What about tax on RD interest?

    Thanks

    Ashal

  23. tulasiram says:

    Hi Friends,
    Good Morning,

    Hemanth,
    Thanks for suggesting these links, I will surely go through these.

    Hi Ashal,
    I thought paying a large sum at once, will help in bring down the principal amount and interest. Can we repay Rs.20000/- every month? How to do it? Do I need to tell the bank to increase the EMI? However, the interest rate on my home loan is 9.90% and the interest I am earning on my RD is 9.75% so I thought to earn interest first and repay the loan after. Guide me if my way of doing is wrong.

    Thank you.

  24. ashalanshu says:

    Dear Tulsiram, why are you not repaying extra every month? Why are you investing in RD for that home loan repayment?

    Thanks

    Ashal

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