Ideal Investment Options for a 30-year Old

Hi, 1 - You can add add your kids' name to the Floater plan in future. 2 - Short term - May I know your investment time-frame? 3 - ELSS Funds - > 5 years is ideal time-period. Kindly read: http://www.relakhs.com/list-of-best-investment-options-schemes-in-india/  

Thanks a lot Sreekanth for your quick response.

1. Yes, I will add the child's name under the Floater plan that I have taken with ICICI. Also plan to increase the sum insured to 10-15L after a few years.

2. For short-term investments, I am ideally looking for time frame of returns in the next 2-3 years. FD is one option but I can have that as an emergency fund. Apart from that, are there any other plans available? Read about some Birla Sunlife 25 Plan while going through portfolio. Is that a good option?

3. For ELSS, the Axis Bank fund advisor suggested 2 options - Either a lumpsum amount (and no SIP) or a minimal lumpsum amount + SIP. Which one is a better option out of the two? Also, for my how months should I continue with the SIP. My plan is 1000/- (Lumpsum) and 1000/- monthly SIPs i.e. 12,000/- per year (atleast for the 1st year).

Look forward to your reply.

Regards,
Zeeshan

Hi, 1 - Short term Investment options : Yes, MIP fund can be a better option. Also, an Arbitrage fund for 1 to 2 year can give you better tax-adjusted returns. But do watch out for any EXIT load. Read: http://www.relakhs.com/best-arbitrage-funds-returns/ http://www.relakhs.com/best-monthly-income-plans-india-mutual-funds/ http://www.relakhs.com/best-debt-mutual-funds-india-top-debt-funds/ 2 - ELSS : Based on your long-term goal, remain invested for atleast 5 years. As the units are locked for 3 years, suggest you to invest manually 2 to 4 installments in an year. If it is not possible, you may set up SIP for 1 year to start with.  

Thanks a lot. Just a couple more doubts. 1. Out of multiple arbitrage funds & the BIrla Sun Life 25 Plan, which one would you recommend? And how much should be the ideal starting amount? I'm a newbie in this field and would like to keep the investments on the lower side so as to minimize risks. Also, I don't intend to take the SIP route and would rather go for lumpsum investment. Is 10,000-20,000/- a good amount to start with. In case of arbitrage funds, exit loads do exist if withdrawal is within 30-45 days. But I am okay with that as I don't intend to withdraw the amount anytime sooner. I would rather withdraw the amount after 1 year so as to avail tax benefits. 2. For ELSS, just to be on the safer side, I will start will a lumpsum amount of 1000/- and SIP of 1000/- for the next 11 months which makes it 12,000 in total for 1 year. Later on, I will discontinue the SIP and instead make a lumpsum deposit of another 10-15K. Please do let me know if these approaches are right? Suggestions are most welcome. Regards, Zeeshan

Dear Zeeshan, Arbitrage fund - Ex : Kotak Equity Arbitrage fund / ICICI Pru Equity Arbitrage Fund. MIP - Ex : Birla Sunlife Wealth 25 MIP II plan. 2 - ELSS : If you are investing for long-term, kindly do not follow 'wait & invest' strategy. Create you goals and then invest the possible and suitable amount in right avenues (it can be ELSS). The more you delay the less would be the compounding effect. Read : http://www.relakhs.com/real-rate-of-return-inflation-adjusted/  

Thanks so much Sir for your response. After going through your blog articles as well as posting questions here, I now have a fair idea of how beneficial is it to start investing at the right time for better returns. Meanwhile, just had a couple more queries - 1. What is the difference between an arbitrage fund & balanced fund? Which one is a better investment option for short term goals say 1-2 years. I don't want to lock in my investments for long. 2. I have an ELSS with Axis LT Eq. Fund with SIP amount being 5K per month. Is it a good practice to go for another ELSS with some different service provider - Franklin Templeton or Reliance or any other. On, the other hand, my wife (earning member) is also interested in taking this ELSS route. So, should I go with Axis itself or should I invest with some other provider - Franklin Tax Shield considering it's performance is good with decent returns. Please let me know your thoughts. Regards,
Zeeshan

Dear Zeeshan, Glad that you are finding my blog posts useful for planning your personal finances. 1 - We should not compare Arbitrage funds with balanced funds (equity oriented). If you have short-term goals you may plan them with Arbitrage or Debt funds. Read: http://www.relakhs.com/best-arbitrage-funds-returns/ http://www.relakhs.com/top-best-balanced-mutual-funds-returns/ 2 - Most of these ELSS funds are Multi-cap funds with tax saving benefit. Sometimes the two ELSS funds portfolios can overlap a lot. In such a scenario there is no point in having two of them in ones portfolio. Your spouse may consider Franklin Taxshield. Read: http://www.relakhs.com/mutual-fund-categories-market-capitalization-large-cap-vs-mid-cap-vs-small-cap-funds/ http://www.relakhs.com/mutual-fund-portfolio-overlap-comparison-tools/ http://www.relakhs.com/best-mutual-fund-scheme-risk-ratios/

Thanks a lot Sir. I will ask my spouse to consider Franklin ELSS and go ahead. Meanwhile, are you aware of Shariah (Islamic Laws compliant mutual funds)? Which ones are the best in that? I did a bit of research and could find out only Tata Ethical Fund. 

Also, can you give me a few pointers on which is the best term plan to go for? I am really confused between LIC e-term, Aegon, ICICI, Max Life & PNB-Met life. 

Hi, I do not track Shariah compliant funds much. You may go ahead with the TATA fund. Term plan from any of the above mentioned companies is fine, as long as you disclose the details in the propsoal form honestly and accurately, there should not be any issue while making a claim (if any). Kindly read: http://www.relakhs.com/best-online-term-insurance-plans-india/ http://www.relakhs.com/irda-latest-claim-settlement-ratio-2014-15-best-life-insurance-company/

Thanks a lot Sreekanth for all your tips and valuable suggestions. I have been able to sort out my financial stuff quite clearly now. But still a few things remain. Currently my financial portfolio looks something like this -  1. ICICI Lombard Health Insurance Family Floater Plan.
2. Religare Secure Personal Accident Plan for me and my spouse.
3. ELSS in Axis LT Eq. Fund with a lumpsum amount of 1000/- and SIP of 5000/- monthly. (For long term returns)
4. Invested 12,000/- in Birla Sun life Wealth 25 Plan for 1 year (For short term returns) Pending things - 5. Need to buy a Term Life Insurance cover but confused with so many options available.
6. Planning to invest some amount in either HDFC/TATA balanced fund for around 3 years (Mid-Long term returns). Have shortlisted these 2 funds owing to better performance. Please let me know if you have any more suggestions. 

Hi, I am very happy to know that you are planning your Personal Finances in a right way! Kindly go ahead with your investments. Term plan : You can buy it from any company. As you have Personal accident cover, you may opt for simple Basic lief cover of any term insurance plan. Kindly read:  http://www.relakhs.com/best-online-term-insurance-plans-india/