how to switch from one fund to another

Let us say you have an investment in HDFC EQUITY FUND. If the fund does not do well as when compared with other funds in HDFC like HDFC TOP 200 or HDFC GROWTH - then you have the option of switching your investment from HDFC EQUITY to say HDFC GROWTH. Always do not switch until you have held the units atleast for 1 year - otherwise short term capital gain tax has to be paid. While switching there is no entry load for the new fund. Switching can only be done in the same fund house.
Also, remember, that it is always safer to switch from the same option i.e,. if you have invested in dividend payout, and you switch to dividend reinvestment, there will be no entry load., but if you switch to growth option you will be charged entry load, because nav of each option is different.
Best of luck

Pension Amount

Mutual funds are ideal investment options for retirement and child planning. However they must form only a part of such portfolios. Here's why. Capital protection is one of the foremost requirements of a retirement or education fund. And there is not a single mutual fund that carries a capital guarantee on your principal amount. For this reason you cannot afford to ignore instruments such as the Public Provident Fund (PPF), National Savings Certificate (NSC) and the like. These instruments offer a decent risk-free return on investment. However, these may not suffice for your post retirement or child planning needs. For this reason you could look at equity-oriented mutual funds to boost returns. But when considering equity instruments, take cognizance of one's time horizon of investment. The longer you can stay invested, the more equity allocation you can afford. Hence, if you are 27 years old and plan to retire at 60, you can invest the bulk of your portfolio in equity oriented schemes. This is true for planning children's education as well. If your child is 16 years old and you need the money in two years, you should completely avoid equity funds.

As you near your goal, you ought to start redeeming your equity investments and re-invest these in safer debt-oriented instruments. Hence when you are about 56-58 years old, you can institute a systematic withdrawal plan and re-invest the money in safer instruments. The category of balanced funds is especially useful for such life stage planning. These funds invest at least 65 per cent of the corpus in equity and the rest is in debt instruments. Hence when the equity segment of the fund does exceedingly well, the fund rebalances the portfolio, booking profits in equity and transferring to debt. Thereby your risk exposure is kept in check.

Creating Pension Fund

It is a wise decision to plan your retirement. most of the pension plans offered in India by various Life Insurance Companies are not very high yielding products and are relatively new. Nowadays, companies are offering the hot selling ULIP (unit linked investment plans) which have high cost associated with them. Plus it's always tough to decode a ULIP because of its complex structure and various associated charges. After the vesting age, the companies propose to buy an annuity for you for the fund value amount.

But, it is advisable to invest in good diversified mutual funds. You can make a well balanced portfolio with a mix of equity and debt by choosing from various five or four star rated funds, from the equity diversified, balanced, debt or MIP category. The debt funds and the MIPs would help balance your portfolio as they invest primarily in debt. This would help you reduce the down side risk. Instead of putting all your amounts in one go, it is better if you spread the investment over 12 months. Once you invest the amount, you can continue to remain invested for 7-8 years. After that, as your retirement age nears, you can start moving your equity investments completely to debt for securing your corpus. This way you can build a huge retirement corpus.

Once you build your corpus in ten years time and wish to start having a monthly income, you can put the whole amount in a Debt Fund. From this fund you can choose a fixed amount that you need every month and enroll for a SWP (Systematic Withdrawal Plan). Alternatively you can put the whole amount in a Fixed Deposit or some post office scheme to get a guaranteed return.

Creating Pension Fund

It is a wise decision to plan your retirement. most of the pension plans offered in India by various Life Insurance Companies are not very high yielding products and are relatively new. Nowadays, companies are offering the hot selling ULIP (unit linked investment plans) which have high cost associated with them. Plus it's always tough to decode a ULIP because of its complex structure and various associated charges. After the vesting age, the companies propose to buy an annuity for you for the fund value amount.

But, it is advisable to invest in good diversified mutual funds. You can make a well balanced portfolio with a mix of equity and debt by choosing from various five or four star rated funds, from the equity diversified, balanced, debt or MIP category. The debt funds and the MIPs would help balance your portfolio as they invest primarily in debt. This would help you reduce the down side risk. Instead of putting all your amounts in one go, it is better if you spread the investment over 12 months. Once you invest the amount, you can continue to remain invested for 7-8 years. After that, as your retirement age nears, you can start moving your equity investments completely to debt for securing your corpus. This way you can build a huge retirement corpus.

Once you build your corpus in ten years time and wish to start having a monthly income, you can put the whole amount in a Debt Fund. From this fund you can choose a fixed amount that you need every month and enroll for a SWP (Systematic Withdrawal Plan). Alternatively you can put the whole amount in a Fixed Deposit or some post office scheme to get a guaranteed return.

TAX Funds

The tax benefit under Section 80C (exemption from income tax for investments in ELSS and other instruments) for investments of Rs 1 lakh is applicable for only one financial year. It's applicable only for the year in which the investment is made. So if you invested Rs 20,000 in a tax planning fund in FY 2006-07, you cannot use this to avail a tax breather for FY 2007-08, even if you didn't use the benefit in 2006-07.

Zilch! You don't pay any tax on the capital gain at the end of the three-year lock in. However, if these tax provisions change in the future, you may be in for a surprise.

Why SIP

Here's our advice to everyone waiting for a correction. There may not be one. The laws of physics do not apply to stock markets; therefore what goes up need not come down. At least not in the near and immediate future.

Stick to a simple principle of investing regularly. If you have a lump sum amount, invest it in an ultra short-term debt fund and institute a Systematic Transfer Plan into an equity fund. Else stick to a plain vanilla SIP. Once done, all you need to do is monitor your fund for slackness in performance. If you are invested in a Value Research rated fund, look out for a re-rating of the fund. It's really as simple as that.

Fund not the fund manager

have the right strategy in place where saving for your child is concerned: starting early and saving periodically. The issue is where you should deploy your funds. The biggest hindrance against unit linked insurance plans (ULIPs) is the high commission costs associated with such packaged products. It is for this reason we suggest you separate your investment and insurance needs. Take a term policy and invest separately in mutual funds. The overall cost is much lower. Also, investing through mutual funds gives you greater flexibility in managing your portfolio. If the fund performance slackens, you have the the option of moving your money elsewhere without incurring any surrender charges or discontinuing your insurance cover.

As regards the process of selecting a fund, you need to look beyond the fund manager managing your money. Consider the objective, investment style and risk profile of the fund. You need to align a fund's objective with your overall portfolio's objective. For starters, you could look at growth oriented schemes in the large-cap category. Select two core holdings in which can infuse money periodically. For easier fund selection you can pick five- or four-star rated diversified equity funds.