Need advice on my existing Investments & Financial Planning

Q & A ForumCategory: Financial PlanningNeed advice on my existing Investments & Financial Planning
rahul_gupta asked 9 years ago
Hi, Thanks for helping us all the people. I apologize in advance for this long post, but I do need this. I need help with some financial planning. I'm 27 and joined my first job (some IT company) in August 2016 which pays 50k monthly. Currently I have no loans. I will be married within 18-24 months, most probably to a non earning person. My father is a salaried employee, so right now I don't send any amount to home. But he will retire at end of next year and he does not have much savings, so after some time I will take care of my parents also. I am not able to think of my long term financial goals. Maybe a car in 3-4 years and a flat in 10 years. Investment : 6k sip AXIS ELSS, 5k sip Birla Tax Relief (total 11 k) going on from 3 months. I have applied for a PPF account, in which I plan to invest 1k per month from April. In addition, from February, I will be spending 1k per month in some Sahara plan (due to some relative) Also, I have invested in some mutual funds (in nov-dec) without doing much research - UTI Healthcare and Pharma - 12k, ICICI Long Term Gilt - 7k (currently at 6% loss), DSP Blackrock MicroCap - 5k, Birla SunLife MIP Aggressive II - 6k. All my MF investments are regular plans, done through a distributor, which was not showing any direct plans. But now I can invest in some AMC's using CAMS. Now my queries, 1. I am thinking of stopping both my regular SIP's and investing in their direct plans from April, more or less same amount. Any advise? 2. I still need to invest around 80k for 80C deductions. I can do that but it will consume all liquid cash in my account. So, should I invest all the 80k or invest only let us say 50k and pay 3k as tax? 3. From above point, where to invest? I was thinking 10k in PPF and rest in ELSS. Also, while spending in ELSS, should I put all in one ELSS fund or spread it across 2-3 ELSS. 4. I need advise on UTI Healthcare and ICICI long term gilt fund i invested in - should i redeem them with exit load, bear the small loss and invest somewhere else or should i let the 1 year complete and see? 5. I also want to do stock trading. I am applying in Zerodha to do so. I am ready to take medium risks but also can do only a little research. What approach should i follow? Is following recommendations sites like axisdirect (including target and stop loss) an ok strategy? Or should I wait for some more time? I should tell you I am the person who checks his portfolio more than once in a day. 6. From April onwards, after all my expenses and investments, i will be remaining 5k-8k with me per month. I want that to build up the emergency liquid cash in my account (which after investing for tax rebate is going to be 0) but i also want better than the 4% interest on savings account. Stocks maybe? FD's? Any advise? 7. Finally, considering my family background and the future situations what I have listed, how should I approach my investment.
3 Answers
Sreekanth Staff answered 9 years ago
Hi, 1 - Do you have Personal Accident insurance cover? What about your & parents health insurance coverage? Read : Best Personal Accident insurance plans. 2 - Suggest you to buy a Term insurance plan at the earliest. Read: Best Term insurance plans. 3 - You may begin planning for your Long term goal ie Retirement planning. And think of medium or other goals after you get married. Read : Why retirement planning is important? with calculator.. 4 - What is Sahara plan? Kindly provide more details. 5 - You may retain DSP fund & Birla MIP fund. Read: Best Equity funds How to pick right mutual fund schemes? Direct plans Vs Regular plans? MF Utility platform for investing in Direct plans. 6 - You may retain some cash as Emergency fund and invest  a portion of it for tax saving purpose for FY 2016-17. You may invest in existing ELSS funds itself. 7 - I do not advise on stock trading, you may better off avoiding short term or intra-day trading in stocks. Read: 10 reasons to avoid short-term trading in Stocks. 8 - For emergency fund, you may consider Liquid funds + cash + Arbitrage fund. You may start noting down all your monthly expenses and try to find out if there are any leaks, you may try to save more till your marriage and build contingency fund ans also try investing more in tax saving avenues. Read: Financial planning Pyramid. List of important articles on Personal financial planning.
rahul_gupta replied 9 years ago

Thanks for advise and the time you took to read and reply to me. I am gonna buy a term insurance asap.
1- Currently I do not have any kind of insurance (accident or health) cover other than provided by company. I am not sure about my parents. I will ask them.
2 – How to start retirement planning? Other than PPF, what instrument I should look into?
3 – Sahara plan is like an RD, where I will invest some fix amount (1k) every month for 5 years and on maturity get a return of around 11%.
4 – Again, should i stop my current ELSS SIP’s and start direct ones? Also, should I redeem UTI pharma and healthcare and ICICI prudential long term gilt fund or should I hold on to them.
5 – Aren’t debt and liquid funds going to attract capital gains tax?
6 – Also, should I invest the whole 50-60k lumpsum in only one ELSS fund?
7 – From next financial year, i will be able to achieve the 1.5 lakh 80C limit through ELSS SIP’s, PF and PPF. Are you suggesting to invest in some other tax avenues in your 8th point?
8 – What do yo mean by leaks in monthly budget?

Sreekanth Staff answered 9 years ago
Hi, 1 - Consider buying Personal Accident & Health covers too. 2 - For retirement planning, use the calculator available in the suggested article, project approx required savings, and start planning. You may consider Equity oriented funds for this goal.  3 - You may ignore this option. 4 - You can create switch to Direct plans (will be considered as redemption) or you can hold the existing units in Regular and can do future investments in Direct plan. 5 - Yes, debt funds' capital gains are taxable. Read : MF taxation rules. 6 - One ELSS fund is more than enough, you may manually invest in 2 to 4 installments (Personally I prefer this way instead of SIPs in ELSS fund. If you do not keep a track of markets, you may opt for SIP). 7 - EPF + PPF + ELSS + Term insu premium should be fine, u/s 80c.  8 - Any extra or unnecessary expenses :)   6 - 
rahul_gupta replied 9 years ago

Thanks a lot again. I will hold the existing regular units and gonna make future investments in direct plan. I will trouble with a few more queries.
1. Considering my current financial situation, what cover should be good for term life?
2. Also, should I redeem UTI pharma and healthcare and ICICI prudential long term gilt fund or should I hold on to them.
3. I like your idea of manually investing multiple times in a year instead of SIP. Do you have any tips if I wanted to do that because even though I track indices and NAVs almost daily, i am not sure what should be a good point to invest in a mutual fund. What strategy, if any, do you use?

Sreekanth Staff answered 9 years ago
Hi, 1 - You may consider life cover for say Rs 50 Lakh and can enhance it by taking one more term insurance policy may be after your marriage or when new family member (kids) enter into your life :) 2 - Sectors funds can be very risky, one needs to understand the businesses or sectors well. Advisable to avoid. You may concentrate on creating a Core portfolio. You may redeem Gilt fund units. 3 - You can track Simple moving averages of Benchmark indices say 200 Day moving average, when the markets are below this avg, you can pump in more money in existing schemes especially ELSS fund(s). Click here to track market indices..
rahul_gupta replied 9 years ago

Thanks a lot. You have resolved my every query. I will consider every point you have made for my further investments. Thanks Again.

Sreekanth Staff replied 9 years ago

You are welcome. Kindly share the Blog posts with your friends 🙂

rahul_gupta replied 9 years ago

I will surely do that 🙂

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