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Chat Transcript

Jiju Vidyadharan

Head Funds & Fixed Income Research , CRISIL

Investments in Fixed Income


Questions Answered


guest: Hi Experts, I am after a fixed monthly income of 10,000 and I have around 10 lakhs to invest. My priorities are capital preservation and tax friendly. What would you suggest? Thanks, HungryInvestor

Jiju Vidyadharan: Systematic withdrawal plan (SWP) from lump sum investment in Liquid funds can be looked at for regular monthly income. Liquid funds being the lowest on the risk profile as their investments are amortised and not marked to market provides stability to the investment, while SWP provide a stable and dependable income stream. Further SWP are also tax friendly as tax is imposed only on the profit made while redeeming units (monthly cash flows). You can choose the top performing mutual funds within the liquid funds category by referring to the CRISIL Mutual Fund Ranking available on www.crisil.com and www.moneycontrol.com

guest: i am 28 years old, monthly savings of around Rs 25,000. I have FDs of Rs 6 lacs. I have started investing in Franklin Tax Shield (g) - Rs 5,000, Birsa sunlife bal 95 - Rs 12,000 (since 5 months) and a SIP of Rs 1,000 p.m. in BSL Frontline Equity Fund (currently 5,000). I want to know how much more should i invest in these schemes. I want to create wealth, say around 5 lacs in coming years.

Jiju Vidyadharan: Franklin tax shield was ranked 3 within the ELSS fund category, Birla sunlife balanced 95 fund was ranked 2 in the balanced fund category and Birla Sun Life Frontline Equity Fund was ranked 2 in the large cap fund category as per CRISIL Mutual Fund Ranking of March 2017. Rank 2 denotes good performance of the fund within the category while Rank 3 denotes average performance of the fund within the category. Investments should be based on the risk return profile and investment horizon. Considering a horizon of 5 years, investment in hybrid and balanced funds is an option that can be looked at. CRISIL – AMFI Hybrid Fund Performance Index (composite category index of hybrid funds) has given 12% CAGR return in the last 10 years. Considering a similar growth rate, a fresh SIP of Rs 6,000 would be able to achieve the corpus of Rs 5 lakhs in 5 years. Investors should however track their investments on a regular basis to check if they are on line with their growth target, in case they are falling short, top of their SIP could help achieve them meet their goals.

guest: Is it appropriate time to invest in debt funds for lumpsum amount or to start fresh new SIPs ?

Jiju Vidyadharan: SIP is a good investment avenue to invest in mutual funds especially equity mutual funds due to vagaries of the underlying asset class. Debt on the other hand tends to provide stable returns and thus lump sum investments can be looked at. Further since, investment horizon of three years is required to derive indexation benefit for investment in debt mutual funds, thus each SIP in a debt fund would need to complete this gestation period.

guest: I have about 10 lakhs in PPF and 2.50 lakhs in stocks and shares and 50000 SIP s per month in MFs I have another 3 to 5 years of earning life.I can save 100000 PM.What is the best financial advice you can offer

Jiju Vidyadharan: Considering that you are nearing your retirement, it would be better to reduce the risk to your portfolio if invested in equity mutual fund, by transferring the money through systematic transfer plans (STPs) into debt mutual funds. Further, considering you have an investment horizon of 3 to 5 years, you can look at debt mutual funds or hybrid mutual funds for investment purposes. You can choose the top performing mutual funds within these categories by referring to the CRISIL Mutual Fund Ranking available on www.crisil.com and www.moneycontrol.com

molabux: Sir. My age is 26 years. I am investing through SIP in Kotak Focus Fund. Please suggest a Multicap funds to start another SIP. Period 10 years or more

Jiju Vidyadharan: Kotak Select Focus Fund was ranked 1 as per CRISIL Mutual Fund Ranking in the large cap fund category as of March 2017. Rank 1 denotes very good performance of the fund within the category. Birla Sun Life Equity Fund, Birla Sun Life India GenNext Fund, Principal Emerging Bluechip Fund, Sundaram Rural India Fund and Tata Equity PE Fund were ranked 1 in the diversified funds category as per the latest ranks available.
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