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POSTED BY ON March 18, 2011 7:27 pm COMMENTS (3)
Hello Everyone,
I’m a 23 year old guy and its just been a year since I started working. Following are my investments and I hope you could suggest me some changes so that I can meet my short and long term goals. I acknowledge that I’ve made some grave mistakes during my initial periods of investment due to insufficient knowledge and I hope to correct them through your guidance.
1. I have a LIC policy (Jeevan Surabhi) for which I pay a premium of Rs.20,000/year for a period of 12 years. Recently I have heard a lot of praise for Term insurance policies and its advantages over LIC policies for a person who’s in his younger days(with low premiums compared to LIC policies). I have just paid the 1st and only premium until now. Is it possible to cancel the policy and get back the full/ part of the amount I paid? Would it be wise to cancel it now and apply for term insurance? If so which Term Insurance policy could you suggest for me?
2. I earn around Rs.30,000/month and plan to invest atleast Rs.10,000/month. I have already made investments of Rs.4000 in HDFC Tax Saver(SIP) and Rs.2000 in HDFC Top 200(SIP) and also a lumpsum investment of Rs.10,000 in Canara Robeco Equity Tax Saver. Recently it was made aware that the ELSS schemes won’t help in saving tax once DTC comes into effect. I plan on continuing the SIP until March 2012 for the ELSS investments, hold it and watch later on. What is your take on this?
Also could you suggest as to how can I split up the remaining Rs.4000 as a SIP in 2 or 3 mutual funds so that I can maintain 80:20 equity/debt ratio in my investments.
3. I recently saw some posters about SBI savings plus account which provides a flexible fixed deposit account that is linked to our savings account with a ‘sweep-in, sweep out’ facility that provides interest on the amount beyond a certain specified limit for the duration it is parked in the FD account until its ‘swept out’. Is it safe to go for this option? Also I couldn’t find any information regarding as to what will happen if we completely withdraw the entire balance from the account? Will we have to pay a penalty for breaking the FD completely? Would be great if you could please clarify this for me.
Thanks in advance.
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Hi Chirag,
(1) There is nothing more than I can add to Manish here.
(2) Yes. ELSS would go out once DTC comes to effect. I think, all the ELSS funds will be re-naming themselves as open-ended funds with some exit load in that case and you can continue to invest in them itself in that case. Do see http://manickkam.blogspot.com/2011/04/top-5-elss-funds-in-india.html for good performing funds.
(3) The sweep-in Sweep-out kind of accounts are provided by many banks now-a-days. If the minimum balance is Rs. 10000/-, Amount above Rs.20,000/- will automatically be converted to a FD. And it will be a 6-month FD or 1-year FD based on what you have asked for. And say, if you have parked Rs. 60,000/- for 5 months and take Rs.25,000/- after 5 months, they would break the FD and create a new one. Some banks would give less interest because of this. (say 6.5% was for 6 months. You would get 5.5% for 5 months. 1% penalty). And they charge some amount only if you do not maintain Minimum account balance on a quarterly basis. At times, you can completely, zero the account but make sure to have minimum balance as per the quarter to be Rs.10000/-. This also differs from each bank to bank.
Regards,
Manickkam.
1. Your LIC plan will not give you anything before 3 yrs of payment ,even after that you wil get very small amount . So you are in a trap right now clearly speaking . I would suggest forgeting the whole money and move on . You can take term plan anytime and thats what you should do as first step .
2. Yes its true that ELSS will go out once DTC comes , but you can invest in them until it comes ,you have 1 more year to get those tax benefits
3. I dont know much about it , but some members have discussed about it here : http://localhost/jagoforum2/emergency-fund/184/
Manish
Hi Manish,
Thanks for your valuable suggestion. It would be equally helpful if you could suggest which Term Insurance policy I could opt for at this time and also advice on which funds I could invest in to complete my investment profile. I’m looking for a investment period of atleast 3-4 years to meet some of my short term goals. Thanks again.