Thursday, May 8, 2008

Investment Advise

One client wrote:

Respected Mr. Srikanth Matrubai
After reading your profile from, I like to talk to you on my MF portfolio. From the commitment to my family, I can’t invest minimum amount say Rs. 5000 to any fund in one go. Hence I always start investment though SIP route to get that magic figure – Rs. 6000 (mandatory for SIP investor) and then I just invest to that fund minimum amount say Rs. 1000/ 500 when the market falls in order to lower my average price (NAV).

My Current portfolio

Under my name:

  1. Magnum Contra (G) - Rs. 8500
  2. HDFC Equity (G) - Rs. 11000
  3. Birla Frontline Equity (G) - Rs. 5000

Under my wife (House wife)

  1. Reliance Vision (G) - Rs. 12000
  2. ICICI Pru Infrastructure (G) - Rs. 10500

Right now I am investing Reliance Vision Rs. 1000 through SIP every month. I am thinking to get started anther SIP Rs. 500 to Magnum Contra since the market will be range bound for next 1 year as predicted by analysts.

My monthly budget for MF investment is around Rs. 3000. The remaining amount I invest in my MF when the market takes a nosedive.

I have one son of 6 years old. I like to invest in another fund for my son. Do you really think of addition one more fund or it would be better if one existing fund should be dedicated to his account. I can add one more fund but it seems hard to maintain that fund with the aim of reducing the average cost / NAV when the market plunges

My target is 50 lakhs after 15 years. Now your suggestion is highly solicited on my goal.

Arindam Mukherjee

My advise to him was :

Dear Arindam,
At the outset, congratulations. You have chosen the best route to increase your wealth. And your choice of portfolio is really top class. You deserve appreciation. Well done.
Under your name, all the three funds that you have invested are very good indeed and continue the same. There is no need to change or add to the same.
Under your wife, both the funds, Reliance Vision and ICICI Infrastructure Fund are very good indeed. But dont invest more in ICICI Infrastructure Fund, as I am never a advocate of Theme Funds especially for conservative investors. As and when possible, you can consider investing in HDFC Prudence Fund or SBI Magnum Balanced Fund in your wife name to give protection to overall portfolio during volatile times.
You have already invested 12000 in Reliance Vision which is a good 27% of your portfolio, so continuing to invest in the same fund may not be such a good idea. Instead you can consider investing in Funds like DSPML Top 100 Fund or Templeton India Equity Fund which invests in High Dividend Yield Funds worldwide.
For Your son you can consider investing in Kotak K30 Fund via SIP and go for their offer of Kotak Star Kid., through which they will offer insurance of the Balance Amt Remaining to be invested if something were to happen to you.
Or if you dont want insurance you can investing in HDFC Top 200 Fund in his name.
Get back to me if you want more clarifications, and alternatively post the same question in Moneycontrol Message Board where you will get many more expert advise and also you can email to Ranjan, Wadia, Ashalanshu for their esteemed advise.
Best of luck.
Srikanth matrubai

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