Investment query from 25 year old

----- Original Message -----
From: NITESH kATHPAL
To: goodfundadvisor@yahoo.com
Cc: sharesher@indiatimes.com
Sent: Sat, 9 Aug 2008 00:01:51 +0530 (IST)
Subject: Gd mutual funds at this time

Sir,

My age is 25 years and i live with my mother.she has a Ulip policy whose 3 years are over.Now,I am thinking of stopping that and invest the same amount into 2-3 Mutual funds through SIP.Can you tell me which are good MF on which one can rely upon?

I am very new to the mutual funds.kindly suggest which one to go for ELSS/Equity diversified/sectoral/larg cap/mid cap etc..Growth or dividend?

i m very confused into this?please help me out.

As i have read on many sites that there is a restriction of money withdrawal in ELSS scheme. But one financial planner told me that we can withdraw money in ELSS by paying the exit Load.Is it true?

I am also looking for a mediclaim of Rs. 2 Lac can you suggest that also?

Regards,
Nitesh Kathpal.


SRIKANTH SHANKAR MATRUBAI's reply :

Dear Nitesh,
First of all, it is good to see that you have realised the foolishness of investing in ULIPs.
Whoever told you that you cannot withdraw from ELSS, is completely wrong. Even your financial advisor is wrong when he says that you can withdraw from ELSS by paying exit load. There is no restriction from withdrawing your amount from ELSS after your investment has crossed the statutory period of 3 years. You need to get a financial advisor to avoid such glaring mistakes.

Regarding your confusion as to where to invest, viz.., ELSS/Equity diversified/sectoral/larg cap/mid cap etc..Growth or dividend. I think the answer can be provided when you give your time horizon, age, risk profile.

There is no difference between Growth and Dividend Reinvestment. In both cases, your fund value remain the same, only the no. of units increases in case of Div Reinvestment ( and the NAV decreases), and in case of Growth, though the no. of units remain the same, the NAV will not decrease when the Dividend is announced and paid.

Go for Dividend Payout option only if you are in the higher tax bracket (as the Dividends are tax free) or if you want a supplement to your regular income.

Regarding ELSS, invest in them more for the sake of tax saving option and convenience of very small lumpsum(500), rather than pure invesment. You could as well invest in Diversified Funds.
After looking at your profile, (age, no of dependents), I advise you to go for Good Diversified Equity Funds with a small percent of investments in Sector funds only as an asset diversification.

My pick of funds for you is as follows:-
1. Birla Sunlife Equity Fund
2. DSPML World Gold Fund
3. Fidelity Equity Fund
4. HDFC Prudence Fund
5. HDFC Top 200 fund
6. Mirae Asset India Opportunity Fund
7. Reliance Growth Fund
8. Sundaram Select Focus Fund
9. DWS Opportunities fund
10. Templeton India Equity Income Fund

Always invest sips and keep reviewing your portfolio every 6 months. If possible, invest in sip right now in Birla and Reliance, as you will the additional benefit of Free Life Insurance.

Visit www. goodfundadvisor.blogspot.com
Best of luck,
Srikanth