Top up investment in existing Mutual Funds

POSTED BY bd_kale ON June 2, 2012 6:00 pm COMMENTS (5)

To meet my long term goals, I have started in 2009 a portfolio of diversified equity funds via SIP with a timeline of next 15 -17 yrs., my current accumulation in this portfolio is around 45 lakhs

I’ll get an extra amount of 25 lakhs in 2nd week of June and since I’d like to use most of this money for longer term purpose, I’m writing to you to seek your advice regarding how and where in India I should invest:

• 5 lakhs in NRE FD for 391 days

• 5 lakhs – Please suggest a good mutual fund (Income / FMP / Balanced) for a period of 4 yrs. – I’m already investing in HDFC Prudence since Mar 2010 via SIP, shall I create a STP to invest this additional 5 lakhs in next 6 months or 1 year instead of buying a new fund?

• Shall I create a STP to invest additional 15 lakhs in next 6 months or 1 year (which timeframe would be better) in 4 debt funds from HDFC, Reliance, DSP BR, BSL, and HDFC to put into HDFC Top 200 G, Reliance Growth G, DSP Blackrock Top 100 – G, Birla Sun Life Frontline Equity – G respectively which I have in my current portfolio? Please suggest good debt funds from these fund houses for creating STP.

The reason I want to put in this extra money is because since the current negative market sentiment is likely to stay for some time to come, may be it offers a good opportunity to buy more at less cost; and, by putting additional 15 lakhs in a year I may be able to bring down the original SIP timeframe of 15-17 yrs. by 3 – 4 yrs.

Thank you for your time.

Kind regards,

Bala

5 replies on this article “Top up investment in existing Mutual Funds”

  1. Dear Kale, In my opinion, as you intend to invest for long term, one lump sum investment is ok in your existing funds. If you do want to play it a bit safe. Invest full money in NRE FDs. Opt for mly interest payment & then invest that mly interest in your existing funds.

    Debt – STP – Eq. fund. ‘ll only increase the taxation troubles for you on the STCG from debt funds.

    Thanks

    Ashal

  2. Ramesh says:

    1. Ok.
    2. I would suggest Templeton India Corporate Bone Opportunities fund.
    3. Since you are already a semi-pro in putting money in the equities, leave this Myopic Loss Aversion syndrome, and put the extra money in your designated funds directly as a lump sum. Over a long period of time, you will not be able to justify the complication of putting in a debt fund and STP to equity.

    The most important part remains the Asset Allocation which you are aiming for. If within the flexible range of your asset allocation, putting all extra money in Equities is allowed, please do so.

    Hope this helps you.
    Ramesh

    1. bd_kale@yahoo.com says:

      Thanks, Ashal and Ramesh,

      I guess I agree with you both about the lumpsum as against the STP. I believe the market currently is near its bottom and may be this is a good opportunity to buy more. Thanks again.

      Regards,

      Bala

      1. Dear Kale, make no mistake. We are not predicting any bottom of market, only we are trying to say that as you are going to invest for a long term, you can invest in lump sum.

        market may go anywhere from now on wards.

        Thanks

        Ashal

        1. bd_kale@yahoo.com says:

          Yes, Ashal, absolutely. not even God can predict if its the bottom. But I agree if I’ve ~ 15 yrs timeframe, lumpsum makes sense. thanks.

          Regards,

          Bala

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