MUTUAL FUNDS-SIP

POSTED BY sonadhi ON April 9, 2013 5:34 pm COMMENTS (8)

Hi

I am a small investor willing to grow & I want to start SIP through MF.I want to invest rs.2000 ech in two funds.One is Franklin India Bluechip(Large Cap) & other is ICICI prudentialTOP100Inst.Thus 4000 per month for at-least 10 years.I am willing to raise this investment per year based on my other deductions like homeloan,etc.This SIP will be purely for my childs benefit instead of high premium LIC policies.Please suggest if I am on right track to grow.

8 replies on this article “MUTUAL FUNDS-SIP”

  1. Dear Sonadhi, the consistency in the performance is the reason for selecting IPru Discovery or IDFC Prem. Eq. over SBI EB.

    Please do note, as rightly pointed out by dear FFC, start pulling out from pure Eq. to debt when you are at least 2-3 Years away from your goal & 100% pull out before 1Y.

    Learning is continuous process. You may think that dear Manish or dear Ramesh or Dear Pattu (FFC) or even myself, know each & everything. That’s not true. We are also learning & want you to do the same. Regarding the paid financial planning services or DIY kind, it’s your call & I respect that but be ready to take blame on your own head if your calls go wrong.

    Thanks

    Ashal

  2. Dear Sonadhi, If you are opting Franklin India Bluechip, the 2nd fund may be a multicap fund like Quantum Long Term Eq. fund or a midcap-small cap fund like IPru discovery or IDFC Prem. Eq.

    Thanks

    Ashal

  3. Choose one large cap and one mid and small cap fund

    FI Blue chip and perhaps IDFC premier equity or ICIC Pru discovery.

    Also have some debt component. For a 10 year goal you should have at least 50% in debt component. Choose an income fund like Templeton India income fund or
    Templeton India Income Opportunities

    Btw Inst fund require a large investment and not suitable for retail investors.

    Since your goal is 10 years away your equity exposure is limited to 7-8 years. So pull out of the equity fund 2-3 years from the goal due date

    1. Ramesh says:

      Now all Institutional plans have been merged with Retail plans, at least with the Direct option. I have got no idea with the Distributor channel options.
      Eg, I have invested in Templeton Ultra short bond fund – Institutional plan – Direct starting from 5k/10k and not the previously required 10lakhs (if my memory serves me right).

      1. That is interesting info. Thanks

    2. sonadhi says:

      Dear PM,
      thnx for your support.As I m new to MF,I really don’t know wht is debt component(Income Funds) though I read about it.Also I didn’t understood why to pull out the equity funds 2~3 years before.Suppose,instead of 10 years,If I keep on investing for 15 years,still would you say to pull out them after 12 years.What Ramesh said got over my head!I am just motivated by Ashal,manish to go for MFs.Thanks for that Ashal & manish.You are always supporting the new peoples in this forum.
      Sona.

      1. Sonadhi,

        Glad that Ashal and Manish motivated you to invest in MFs. They however NEVER advised anyone to stay invested in equity MFs until the end of the goal. When you start investing for a goal you can afford some short-term volatility in capital for long-term growth. Once you near your goal the volatility associated with an equity instrument will result in loss of capital so you need to get out a couple of years before the goal due date.

        Start investing in one of the suggested funds and monitor the fund value each month. The answer will be come self-evident.

        With regard to Ramesh’s answer, find out what is an institutional plan and regualr plan wrt MFs.

        You and every other retail investor (new or experienced) have only two choices:
        1. Take advice by a paying a fee to a financial planner
        OR
        2. Do it your self. This option involves continuous, repeat continuous leaning. This is what Manish, Ashal, Ramesh are doing.

        So getting inspired is one thing. Acting on and basing expectations on half-knowledge is another. So before you invest please be clear about the nature of the investment and how to handle it.

        1. sonadhi says:

          Hi PM,
          Thanks for info on volatility.i will certainly look into Institutional plan & regular plan.Action based on inspration will be certainly there.
          Ashal,
          all the time,I respect your suggestions,i want to know that in mid-small cap,the SBI emerging business seems to be performing better than the IPrud.discovery or IDFC prem.Eq.based on alpha,beta,std,dev.Then what could be the reason for suggesting iPru Deiscovery or IDFC though it may be merely your opinion.Also what you say on the income funds as suggested by PM.Also would like to know on how to increase the investment per year in existing MF.
          I know my questions are very basic but I am learning.Thanks again!
          Sona.

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