POSTED BY March 30, 2014 10:10 am COMMENTS (23)

ONI want to invest 2500 in tax saving mutual fund for long term (more than 10 years), I have done some research and found following funds having good performance

ret risk grade expense ratio alpha beta sharpe ratio std dev

1) SBI magnum taxgain 23.48 below avg 2.21 3.63 0.85 0.25 15.94

2) ICICI prudential tax plan 22.23 below avg 2.40 2.94 0.87 0.19 16.99

3) HDFC taxsaver 21.44 avg 2.30 -0.57 0.88 -0.01 16.85

These funds have also performed better than their benchmark.

Please advice on these funds or any other fund. All these funds have ”direct” also ex. SBI magnum taxgain direct, which shows only 1 year returns, but i don’t know what is this

is it the right time to invest in MFs ?

Dear Patrick, please do whatever you like.

Thanks

Ashal

Dear Patrick, then do not invest at all in ELSS. 🙂

Thanks

Ashal

Dear Ashalanshu, why? chances of good returns for more than 10 years are high in MFs.

Dear Patrick, how ‘ll you liquidate from Tax saver FDs in case of need in next 6-12-18-24 months?

Thanks

Ashal

Dear Ashalanshu, i can take FD’s amount after 5 years, but in case of MF’s chances of good returns is less in 5 years(depends on market)

Dear Patrick, please invest 8000 Rs. mly in next 6 months into Tax saver fund of your choice. HDFCTax saver, Quantum Tax saver.

Thanks

Ashal

Dear Ashalanshu, why this big amount ?

I have planned to invest only 5000 as SIP in equity (2500 for tax saving equity and 2500 for normal equity).

So, the tax saving equity equals 24000 which will left 24000(48000-24000) which i will invest in tax saving FD (to use it in short-term)

As i am looking this investment as for future, that why i am not putting big amount in them.

Dear Patrick,

If my calculation is right, 2500*12 in tax savings mfs will be Rs. 30k.

So you are left with Rs. 18k, and not Rs.24k 🙂

Regards,

Hemanth.

Dear Patrick, what about life insurance? Are you not having any term cover as of now?

Thanks

Ashal

Hi Ashalanshu,

I forgot to mention my term insurance of Rs 3809, so the left amount now is approx. Rs 48000

Dear Patrick, how much in total you want to invest in tax saver funds in the year?

Thanks

Ashal

Dear Ashalanshu, 2000 monthly EPF was cutting from my salary and i also add 2000 monthly in PPF , so to complete 1 lakh of section 80C i am left with 52000

Dear Patrick, you mean to say 2500 Rs. mly or one time?

Thanks

Ashal

Hi Ashalanshu,

I mean 2500 rupees monthly (SIP)

There should not be anything called right time to invest in Tax saving Mutual Funds, the purpose is : 1) Tax saving and 2) investing in equities for that.

So, should be investing through SIP to spread the risk of timing the market, lumpsum is never advisable, and market is already on high.

1 more thing, how come Axis Long term equity fund didn’t make in your list, the best performing take saving fund in recent time.

Thanks

Sumit

Hi Sumit,

I have also checked axis long term equity fund returns, yes the returns are high but on valueresearchonline.com it is showing only 3-year returns(bacause it was launched few years ago) and i have read somewhere that it is better to invest in a fund which is giving good returns from many years.

There are two plans in investing in Mutual Funds.

‘Direct’ : When you invest directly with AMC.

‘Regular’ : When you invest via a brooker.

Go through the below article to know the benefit of ‘Direct’ plan

https://www.jagoinvestor.com/2013/04/direct-plan-in-mutual-funds.html

Go to below link to know how to choose a mutual fund and decide.

http://freefincal.com/mutual-fund-calculators/step-by-step-guide-to-choosing-a-mutual-fund/

If you invest after 1st April, it will come under financial year 2014-15. For your tax savings for 2013-14, you have to invest before 31st March,2014.

Regards,

Hemanth.

Hi Hemanth,

the direct plan of every mutual fund is not showing returns for more than 1 year.

http://www.valueresearchonline.com/funds/newsnapshot.asp?schemecode=15862

Hi Patrick,

‘Direct’ plans are stared from Jan 1, 2013. So, there are only 1year returns.

The portfolio of ‘Regular’, ‘Direct’ plans are same except the expense ratio which is not there in ‘Direct’ plans which is beneficial for the investor.

If you have not gone through the article, please go through it.

Let me know in case of any clarification required.

Regards,

Hemanth.

Hi Hemanth,

Now, I have read the the document from the link given by you. It was very useful and all my doubts regarding “direct” and “regular” got cleared.

Can u suggest me which fund i should invest in from these four funds(3 listed in my question and axis long term equity) ?

Dear Patrick,

Go through the link which I have given in my previous comments to choose a mutual fund.

It is the best doc I found till now to choose a mutual fund.

It takes time to the same in the doc, but its worth doing it.

Hope it also helps you. 🙂

Regards,

Hemanth

Hi hemanth,

I have read that document earlier and on its basis only i have listed the funds(comparing alpha,beta,expense ratio etc) in my question. Which fund you will suggest me from these ?

Dear Patrick,

If you have followed the process as in the link, you will get only 1 mutual fund. 🙂

The first step itself is to choose 4-5 funds. Here are your four funds. Now, do the analysis

Cheers,

Hemanth.