Best Tax Saving Fund

Sunny asked :
"Hi,I wish to invest 60k in a tax saving fund through SIP route,should I invest in Sundaram Tax saver or Kotax Tax saver ? Which is the best in the category ? Have lost quite a asmount money in SBI Magnum"

SRIKANTH SHANKAR MATRUBAI's Reply :::

Dear Sunny,
If you had been following my advice, I had become sceptical about SBI Magnum Tax Gain 93's repeatation of its excellent past performance about a year back itself. the number one reason being its Bloated Corpus.
Both of your choices, Sundaram and Kotak Tax Saver Funds are very good. You can definitely go ahead.
You can also consider investing in
Birla Sunlife Tax Relief 96 fund
Fidelity Tax Advantage Fund
You can also consider DWS Tax Saving Fund. This Fund not only has given decent returns but as a BONUS offers Free Life Insurance, 5 times your investment. No conditions, no asteriks. Plain and Simple.
Regards,
Srikanth Shankar Matrubai
Visit http://goodfundsadvisor.blogspot.com for More Detailed Mutual Fund Advise.

How much 5000 earn in 24 years?

A Guest asked ::
"if i am investing rs 5000 per month for 24 yr.how much return should i calculate in my net value."

SRIKANTH SHANKAR MATRUBAI'S REPLY :::

Dear Guest,
Good Question. Before answering, I would like to ask you, will you be disciplined to continue your investment for 24 years without break?. If yes, then you sure would go places.
Since your question is hypothetical, I too would have to answer hypothetically, as the returns would vary on a yearly basis, and if you consider an approx value, then the returns would be like this ::

Your 5000 per month for 24 months, your investment(your input value) would be Rs.14,40,000 and the returns would be
@12% returns === 75,42,143
@14% returns === 1,02,26,967
@16% returns === 1,39,26,119
@18% returns === 1,90,20,407
Your returns @18.35% would cross 2 crores. Just see the difference between 14% and 18%.
This small 4% difference would over a period of time result in a difference of MORE than 1 CRORE!!!
so, my advise is Go for Good Diversified Equity Funds and this would give the extra 4% returns.

Best of luck,
Srikanth Shankar Matrubai.

Visit http://goodfundsadvisor.blogspot.com for More Detailed Mutual Fund Advise.

SHALL I CONTINUE WITH MY EXISTING SIPS....??????

Neha asked ::::

Dear Sir,
I am 38 and investing in MF thr SIP since last 1 year which are
1. Rs.1000/- every month in REL.GROWTH
2. Rs.1500/- every month in SBI Contra
3. Rs.2000/- every month in DSP ML TIGER
4. Rs.1000/- starts now in pru ICICI POWER

Kindly advise me about my portfolio. should i continue or change it.

FROM : Neha Aildasani

SRIKANTH SHANKAR MATRUBAI'S REPLY ::::
Dear Neha,
Your portfolio at first glance looks good. But sadly, 60% in Sector/Theme Funds does not angur well for your financial health. while you may continue to invest in Reliance Growth and SBI Contra, kindly have a relook and stop your sips in DSPML Tiger and ICICI Power Fund. Even in SBI contra you better reduce your sip to 500 per month only. And in Reliance Growth, you split your sip for better returns.
With the saved amount of 4000 through stoppage and reduction of sip, you can consider investing in the funds suggested below:
1000 * 1 in Birla Sunlife Frontline Equity Fund (1000)
500 * 1 in DWS Tax Saving Fund (500)
1000 * 1 in DSPML Top 100 fund (1000)
1000 * 1 in HDFC Prudence Fund (1000)
500 * 1 in Sundaram Select Focus Fund (500)
This will give a Balance to your portfolio.


Best of luck,
Srikanth shankar Matrubai

www.goodfundadvisor.blogspot.com

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Srikanth shankar matrubai

Birla Sunlife Dividend Yield fund

Mr.SINHA asked :
Can you tell me something about Birla Sunlife Dividend Yield Fund?

SRIKANTH SHANKAR MATRUBAI'S answer :
Dear Sinha,
Dividend Funds, as a norm, invest in High Dividend Yielding Stocks. Which means, they invest in Fundamentally Strong companies. However, they will be unable to invest in BlueChips, as BlueChips do not have a High Dividend payout Ratio, which makes these companies unattractive to this fund.
High Dividend Yielding Stocks tend to fall slower and lower than the rest of the market and likewise, tend to rise slower and lower than the rest of the market. Thus, the Dividend Funds will underperform in a Rising Market and Underperform in a Falling Market.
So, this fund is neither suitable to a Aggresssive Investor nor a Passive Investor. Dividend Funds were introduced to cater to investors who looked at protecting their Capital as a priority and Appreciation only as Secondary.
Rather, one can look at investing in Large Cap Funds. Large Cap Funds like Dividend Funds fall less than the Rest of Market, but the difference here is, Large Cap Funds rise Faster than the Dividend Fund in a Rising Market.
Thus even for a Risk-Averse Investor, it is advised to invest in Large Cap funds rather than a Dividend Funds.
Regarding Birla Sunlife dividend Fund, The Fund has been an underperformer over a period of 1, 3, 5 years. So, clearly an Underperformer. The only good point is, that the fund fell less than its peers. So, Mr.Sinha, better look to invest in Diversified Equity Funds with a Large Cap Focus like Birla sunlife Frontline Equity Fund
DSPML Top 200 fund
HDFC Top 200 Fund
Kotak K30 fund
Sundaram Select Focus fund

Regards,
Srikanth Shankar Maturbai

What is an FMP

Mr.N.KRISHNAPRASAD asked :
Mutual Fund expert, can you explain to me, what exactly is Fixed maturity plans.
krishnaprasad

SRIKANTH SHANKAR MATRUBAI 'S ELABORATE REPLY :

Dear Krishnaprasad,
Fixed Maturity Plans are the flavour of the season and the bug seems to have caught you.
What are fixed maturity plans?
FMPs, as they are popularly known, are the equivalent of a fixed deposit in a bank, with a caveat. The maturity amount of a fixed deposit in a bank is 'guaranteed', but only 'indicated' in the FMP of a mutual fund. The regulator does not allow fund companies to guarantee returns, and hence the 'indicated returns' in FMPs.
Typically, the fund house fixes a 'target amount' for a scheme, which it ties up informally with borrowers before the scheme opens. Since the fund house knows the interest rate that it will earn on its investments, it can provide 'indicative returns' to investors.
FMPs are debt schemes, where the corpus is invested in fixed-income securities. The tenure can be of different maturities, from one month to three years. They are closed-ended in nature, which means that once the NFO (new fund offer) closes, the scheme cannot accept any further investment.
These FMP NFOs are generally open for 2 to 3 days and are marketed to corporates and well-heeled, high net-worth individuals. Nevertheless, the minimum investment is usually Rs 5,000 and so a retail investor can comfortably invest too.
FMPs usually invest in certificate of deposits (CDs), commercial papers (CPs), money market instruments, corporate bonds and sometimes even in bank fixed deposits.
Depending on the tenure of the FMP, the fund manager invests in a combination of the above-mentioned instruments of similar maturity. Say if the FMP is for a year, then the fund manager invests in paper maturing in one year.
The fund received is for a pre-specified tenure and the exit load from this plan is high (usually 1 per cent to 3 per cent, depending on the time of redemption). So, the fund manager has the liberty to deploy most of the funds mobilised under the scheme.
The actual return can vary slightly, if at all, from the indicated return. Against that, a bank fixed deposit exactly prints the amount which is due to you on maturity on the FD receipt. However, FMPs do earn better returns than fixed deposits of similar tenure.
Another Advantage with FMPs is the Indexation Benefits available to it.

Regards,
Srikanth Shankar Matrubai

Student's 1500 SIP Investment

Ajay Kumar wrote :
hello sir,i am a student new to mutual funds and dont know any thing
about it.i saw ur blog which was helpful to know something.in the blog
u suggested equity funds more,so i want to invest 500 each in three
funds(Hdfc top 200,Reliance growth fund and Fidelity or Birla equity
fund) every month because my pocket money is 2000 only so i can invest
only 1500.my main aim is to make the money double or improve in 3-5
years.will it be possible?i choose these funds bcoz u repeatedly
suggesting these funds in ur blog.presently i have 24,000 in my
savings account(canara bank) and i get monthly 2000 pocket money.plz
give me any options to improve my money.i didn't withdrawed the amount
from past 4 years(25000).i use my savings account only for
deposit.so,plz give me suggestion that how can i use this 24000 to
make some profit.thank you :)


SRIKANTH SHANKAR MATRUBAI'S REPLY ::::

Dear Ajay Kumar,
Thank you for your kind words on my blog.
Your 1500 monthly investment is definitely not a small sum of amount. And it is heartening to note that you are intending to invest 75% of your monthly income(pocket amount) in mutual funds. I appreciate your resolve towards saving and congratulate on choosing the right avenue for savings.
Regarding doubling your money in 3-5 years may not be possible, simply because, the markets are not in the bullish mode (which it was for the past 5 years). However, 18% returns should be considered as achievable.
For your age, with practically no BIG expenses coming up in foreseeable future, you can go slightly aggresive with your fund choices. My choice of investment would be
500 * 1 in Fidelity Equity Fund
500 * 1 in Birla Sunlife Equity Fund
200 * 2 in Reliance Growth Fund
100 * 1 in Reliance Natural Resources Fund

Also, for your 24000 lumpsum amount which you have in your SB Account, you can consider investing in a Large Cap Fund like HDFC Top 200 Fund.
Keep at least 3 months expenses in SB Account as Emergency Fund and balance remaining keep investing in Mutual Funds to make maximum revenue.
Best of luck,
Srikanth Shankar Matrubai.