Publication details: Smart Money – Bloomberg TV India – 28-10-2015
Responses, opinion and view from Kartik Jhaveri.
Question sent by Satyajit Majumder:-
Age: 30
Marital status: Unmarried
Dependents: Parents (partially dependent)
Where do you work: Pune/IT sector
Annual income: Rs. 9.5 lakhs
Monthly expenses: Rs. 25,000
Monthly surplus: Rs. 30,000
Insurance details (sum assured, premium amounts):
Medical: Rs. 7.5 lakhs from employer (dependents also covered).
Life: LIC Rs. 2.5 lakhs; rs. 10,000 p.a.
ULIP: HDFC ULIP (HDFC Youngstar Super and HDFC SL ProGrowth Super II) Rs. 1.5 lakhs; Rs. 15,000 p.a.
Other: Term insurance Rs. 30 lakhs.
Investment details:
PF: Rs. 3.5 lakhs (total amount as of now).
PPF: Rs. 2 lakhs (total amount as of now).
FD: Total Rs. 1.5 lakhs in tax saving FD and NSC .
MFs: Rs. 2,000 in each of the below funds:
- ICICI Prudential Tax Plan – Regular Plan – Growth.
- SBI Magnum Tax Gain Scheme – Regular Plan – Growth.
- Reliance tax saver (ELSS) Fund – Growth Plan – Growth.
Questions:
- I plan to invest Rs. 5,000 more (in SIP mode) in equity fund where I am looking for 5 year horizon.
- Also I want start investment in debt fund. Shall I consider 1 time investment or SIP again to invest in debt fund. I have Rs. 1.5 lakhs surplus as of now and want to invest Rs. 5,000 more in SIP model. I need this amount after 1-1.5 years. What is your suggestion on this?
- I have started both of above mentioned ULIP (HDFC Young Star Super and HDFC SL ProGrowth Super II) in 2010. I feel these are average performers. I do not need insurance coverage as of now. So shall I discontinue this and book profit and invest in mutual fund?
- Last question is general question: If any person changes job after 5 years, he/she can withdraw full PF amount without paying tax. Will you suggest withdrawing PF and investing that amount in mutual fund is better than transferring PF account ? Reason behind is PF interest rate is around 8.5.If anyone wants to invest in PF account for retirements then horizon is long time. So better to invest in equity market.
Advice given:
- Investing Rs. 5,000 p.m. is a good option, you should look to stay invested in equity funds for a longer horizon to amass a healthy corpus.
- For instance an SIP of Rs. 5,000 for the next 10 years will amass approximately Rs. 13 lakhs. This is considering a growth rate of about 14% p.a.
- It is better not to invest large sum at one go, instead you could park the lump sum money in liquid funds and move to equity funds in a staggered manner via STPs.
- Yes you should not mix insurance and investment requirements.
- We can retain the PF (as a debt component) and divert the savings towards equity funds.