Starting FInancial Planning with MF

POSTED BY suhel desai ON June 29, 2012 6:04 pm COMMENTS (13)

Hi all,
Have been reading jago investor for past few weeks and finally created my account today.
I would be glad if someone would give me some good advice for long term 10+ mutual fund investment,.
I am 27 years earning upto 45K per month. I am married but no kids (atleast for another year or two more)and wife also works and earns upto 35K Per month. Would like to know which MF’s would be good for someone like me with an Avg risk profile.
Me and my wife already have PPF account where we invest 50K per year each. I have an education loan for which i pay 10K per month for another year.
Also having term plan of 60 lacs for which i pay around 6700 per year. Medical insurance is taken care by my company
Need to start investing in MF around 10 K for starters for both me and my wife
and increase 5% every year.
i am planning to invest 10 K per month in following 4 funds
1. DSP BR Top 100 Equity – 3k
2.HDFC Prudence- 3k
3. Quantum Long Term Equity – 3k
4. HDFC Tax Saver – 2k
would like to know if above funds would be good enough and would be be glad if someone could suggest similar profile (3-4 funds) for my wife with lower risk
Any help would be appreciated. Thanks

13 replies on this article “Starting FInancial Planning with MF”

  1. sunil says:

    Nice Analysis Overall

  2. Dear Suhel, although a lot has been discussed by all but still I’m adding some more. As of now you people are DINK (double income no kid) but very soon you people ‘ll become SIDK (single income double kid) & ‘ll remain so till the younger kid is old enough to allow your wife to work.

    Also your current salary of 45K translates into an yly income of around 6L Rs. So your life cover should be around 1C to counter the impact of inflation also after few years.

    Please update with your views on the points raised.

    Thanks

    Ashal

    1. suhel desai says:

      @Ashal – Thanks for your revert.

      I do agree with that, infact i plan to purchase 2 more term plans for 25 lacs each in next few months.

      What do you think about me and my wife investing in same funds. Or if it would be better to put in different funds

      1. Dear Suhel, can you define any benefit out of this micro management of your term plan of 50 +25+25L?

        In my opinion, both of you should invest in same funds or at least within a restrictive over all no. of funds say 4-5. In 2+1+2 fund manner, where 1 fund may be common (of your choice).

        Thanks

        Ashal

        1. suhel desai says:

          Thanks ashal.

          Well the idea behind splitting term plan was to opt for different insurance companies as i didnt want to take entire insurance from single company . Like i have plan with aegon religare now . In coming months can take term from HDFC and say AVIVA of 25 each.

          1. Dear Suhel, If your idea is due to fear of adverse claim settlement ratio – my take opt this way –

            1C single cover from the choice of your term cover.

            5L from LIC’s Anmol Jeevan as people in general do have more faith on LIC for Claim settlement.

            The combined prem. ‘ll be lower than this split prem.

            Thanks

            Ashal

  3. Nitin S says:

    On funds side I would say I have been investing from last 7-8 yrs now and out of all funds( dspbr top 100, hdfc top 200, hdfc prudence etc) that I have, HDFC Prudence has been star of my portfolio. Performs excellently in up and down markets. Just my personal opinion.

    1. suhel desai says:

      @nitin – thanks for your inputs.

      i had also done a bit of reading on few sites like value research , money control and came up with hdfc prudence so thats why was thinking of including it in my port folio

  4. Renu Chauhan says:

    Hi Suhel,

    Welcome to Jago Investor… Although even am new only 🙂

    Ramesh has already suggested you a very good suggestion of first finding out how much is your ELSS requirement.

    The only point i would like to add is “give your investments a direction”. For eg: Are you sure you wont require this money in next 5 years or say 1 year? What if you want to buy a new house in 5 years? or a new car in 1 year??
    The only reason am asking these questions is that you should set a goal for your investments. Saying that its for 10years is easy but to maintain investments for such long time is really difficult without a goal. So please set a goal 🙂

    About investments i agree with Ramesh that 2-3 funds (both for you and your wife) would be suffice for both of you.

    My choice of funds would be:

    DSP BR Top 100 Equity or ICICI Pru Focused Bluechip – Large Cap
    Quantum Long Term Equity – Mutli Cap
    IDFC Premeir Equity Fund – Plan A – Mid Cap

    Thanks,
    Renu

    1. suhel desai says:

      @ Renu – Thanks for ur inputs.

      Regarding goals as i said i was looking for long term investments which will include child education, marriage and my retirement.

      I already have my own house but even though if i plan to go for another house in say 5 years may be for investment then i will have someone amount from my salary and almost complete from my wifes salary to put into it as we both are investing just 10 K each as if now . As for future she does plan to keep working so i guess it shouldn’t be that much of a problem for us.

  5. Ramesh says:

    Few points.

    1. Get a decent amount of emergency fund amount, either first up or gradually over a few months.

    2. Fill the 80C section money first. As I see, 50k in PPF, 6.7k in insurance, some amount in Education loan (I am not sure about the amount which will get reflected in 80C section, since the interest amount should be less in the last year, but do check that out). Rest of the money should be put in an ELSS. So bump that up accordingly. Either in next 3-4 months or over the next 9 months (the months remaining in this financial year).

    3. Rest of the money can be put into your 2 funds 1, 3. I dont really see the need of an extra fund – HDFC Prudence in your case.

    4. Do a similar analysis in your wife’s case. Just keep the Same funds there too. Those 2 funds are very decent. I dont really see any need for separate funds.

    Keep learning and investing.

    Ramesh

    1. suhel desai says:

      @ Ramesh – Thanks for your revert and analysis.

      1. With respect to emergency funds i already have good amount to go for 3-4 months in my savings bank account. I have just registerd with fundssupermart and as per them if i apply now my ECS will start from august so will accumulate more in SB.
      2. Under 80 C i have 50K PPF and around 20-25 K so need to invest around more 30 K but so can put around 2.5 in ELSS like HDFC Tax saver
      3. I selected prudence it having balanced funnd in my portfolio would diversify the risk ( i am a new investor so cant see hard earned money go 🙂 )
      4. For wife i was thinking of going for different funds to again diversify and minimize risk. Probably if i go for DSP BR will take ICICI Pru Focused Bluechip for wife.

      1. Ramesh says:

        1, Ok and good.
        2. 30k. You can put that amount in, in the next 3 or 4 months, and then start other funds. Just another thought process.
        3. Prudence is not a typical balanced fund. And its style has changed over time too. More or less, it behaves like a typical equity fund (not a typical balanced fund). YMMV. Dont take a short term view in equities. If you have that issue, start slowly into equities rather than start with wrong notions.
        4. Diversification is good with stocks. But a number of different funds is not Diversification. 10 funds is not better diversification than 2 well-diversified funds. Even then, if you want, go with Franklin Blue Chip rather than ICICI Focused bluechip – Think, why focused fund when you are looking for diversification? Think again. 😉

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