What after Rs 1.5 Lakh PPF limit exhausted?

Dear Santosh, I agree that tax-saving is important but it should not be the sole criteria for making investments.  May I know your financial goals?  Kindly go through below articles; http://www.relakhs.com/think-beyond-tax-investing-tax-planning/ http://www.relakhs.com/tax-treatment-taxation-rules-investments-eee-eet/ http://www.relakhs.com/list-of-best-investment-options-schemes-in-india/ http://www.relakhs.com/income-tax-deductions-fy-2016-17-ay-2017-18-tax-exemptions-benefits-rebates/

Hi Shreekanth,   Thanks for the prompt reply. The financial goal for PPF + extra investing (elss/eqity/or whatever) is to create a retirement fund. I am 35 so at least 20 year timeline is there.

1. I am in 10% tax bracket, so if i invest the rest 1.5L  in elss or equity - does it mean, i have to pay 10% straight as tax on this amount at the end of the year. 
2. Given this additional information, what would you suggest in reply to my original question.

Thanks. Santosh    

Hi, PPF is one of the best fixed income long-term savings product. But considering your age & profile, you may reduce the allocation to PPF and start investing in ELSS or Equity oriented funds for your long-term goals as well as tax planning. Kindly note that investments in ELSS funds are locked for 3 years. Investments in regular equity oriented funds do not have any lock-in period. The taxation on MFs come into picture only at the time of redemption of units. If you do not sell the MF units then no taxes. Suggest you to go through below article on MF taxation; http://www.relakhs.com/mutual-funds-taxation-rules-capital-gains-tax-rates-on-mfs-fy-201516/   As your goal is >10 years away, suggest you to build a decent Equity mutual fund portfolio with one Diversified equity fund and on Mid/small cap fund. You may invest lump sum money in few installments whenever markets fall in the next couple of months.  Else, set up STPs.  

Hi Shreekanth,
 
I have gone through the links. Very informative indeed! As per your advice, i will have one Diversified equity fund and one Mid/small cap fund.

1. For diversified equity, do you think 'icici pru value discovery fund' is good one? (I admit that i just googled and found a site which lists it as #1 in diversified equity category".
2. Little confused about Mid/small cap - If you could suggest a fund in this category, it would be a great help. 

Regards, Santosh

Hi Santosh, 1 - It is a decent pick. 2 - May be HDFC Mid-cap or Mirae Emerging Bluechip or UTI Mid-cap. Kindly read: http://www.relakhs.com/top-15-best-mutual-funds-schemes-2016-sip-lumpsum/ http://www.relakhs.com/best-mutual-fund-scheme-risk-ratios/

Hi Shreekanth, Greetings for the day. I see that some  ICICI funds come in series: Icici prudential growth fund series 5 ... and then series 6, series 7 and so on. What does this mean? Do these funds have common criteria/portfolio or some other chartacterstic? I will appreciate if you can please help me understand this .. or point to a resource where this is explained. Regards, Santosh  

Dear Santosh, These are primarily Close-ended funds. The maturity period will be pre-defined, say for 3 years or 5 years.  To redeem units in these kind of Funds, the investor has to do so through stock exchanges only. "Close-ended mutual fund Schemes have a stipulated maturity period wherein the investor can invest directly in the scheme at the time of the initial issue and thereafter units of the scheme can be bought or sold on the stock exchanges where the scheme is listed. The market price at the stock exchange could vary from the schemes NAV on account of demand and supply situation, unit holders expectations and other market factors. Usually a characteristic of close-ended schemes is that they are generally traded at a discount to NAV; but closer to maturity, the discount narrows."  (Courtesy - moneycontrol). They may have different Portfolios. Personally, I don't prefer to invest in Close-ended funds.    

Hi Shreekanth,
Happy New Year.  It has been like 3 months since we last exchanged messages. Based on our conversation, i am now investing regularly on following 2 funds:

1. ICICI Pru Value Discovery - Direct - Growth
2. HDFC Mid cap Opportunities - Direct - Growth.

The total amount invested is 28,000 per month. I appreciate your help in putting this all together and my finances are now managed way better than they were earlier.

Just wanted to check with you on following queries:

1. Rather than investing monthly ... would it be better to invest weekly? 7000 per week rather than 28000 monthly? 
2. Valuereasearch shows PE value of funds in portfolio tab. Would it be better if i look at those values before investing and modify/delay/increase investment based on that value? At present, i ignore them. Just make monthly investment more or less around 25th of month.

Appreciate your help. Santosh

Dear Santosh, You can set-up weekly SIPs :) Also, you can track Daily moving Averages or PE values and invest additional lump sum amounts when you believe that markets have corrected a bit and right time to invest more. But do note that it is always better to keep an investment plan as simple as possible. But nothing wrong or right here :)