Hello Sreekanth,
My PPF account will mature on 2021. My online banking portal under "Partial PF withdrawal" mentions that I can withdraw 6.28 lacs from the accumulated amount. Should I withdraw this amount and invest in a equity/equity-oriented balanced mutual fund?
My current MF portfolio:
Reliance Regular Balanced Savings Fund Growth (6.5 lacs)
ABSL Balanced 95 Growth (6.5 lacs)
HDFC Balanced Fund Gr (4.5 lacs)
ICICI Balanced Fund Gr (80k)
All of the above are lumpsum investments done on October 2017 with monthly SWP opted at 8% p.a.
Thanks in advance. :)
3 Answers
Hi,
May I know the investment time-frame (horizon) for the invested and planned investments?? What is your investment objective and the reason for planning to switch to MFs from PPF??
How much dependent are you on the income / SWPs of these investments?
Suggested readings :
https://www.relakhs.com/ppf-account-premature-closure-rules-2016/
https://www.relakhs.com/mutual-fund-portfolio-overlap-comparison-tools/
Hello,
Investment time-frame for the mentioned balanced funds is minimum 5 years, but actually I plan to keep it as long as I see good capital appreciation without increasing SWP amount. All these investments are for my mother who is a homemaker and has inherited money. For several years, most of the money was in traditional debt instruments like bank FD, PO MIS, PO Term Deposit, PPF, gold, real estate, NSC, KVP etc. Last year, upon discovering the falling interest rates of these investments, I stumbled upon mutual funds. Since then, I have been trying to convert these investments to mutual funds for better returns and a better retirement corpus for her.
As a beginner, I read everywhere that she should start with balanced funds and hence the fund selection. She is very much dependant on the income from the SWPs. From this year, I will stop investing in PPF and start investing in ELSS. Also, since PPF offers only about 8% and MFs provide about 12% return, this is primarily the reason for shifting the money.
Please advise if these are correct decisions.
Investment time-frame for the mentioned balanced funds is minimum 5 years, but actually I plan to keep it as long as I see good capital appreciation without increasing SWP amount. All these investments are for my mother who is a homemaker and has inherited money. For several years, most of the money was in traditional debt instruments like bank FD, PO MIS, PO Term Deposit, PPF, gold, real estate, NSC, KVP etc. Last year, upon discovering the falling interest rates of these investments, I stumbled upon mutual funds. Since then, I have been trying to convert these investments to mutual funds for better returns and a better retirement corpus for her.
As a beginner, I read everywhere that she should start with balanced funds and hence the fund selection. She is very much dependant on the income from the SWPs. From this year, I will stop investing in PPF and start investing in ELSS. Also, since PPF offers only about 8% and MFs provide about 12% return, this is primarily the reason for shifting the money.
Please advise if these are correct decisions.
Hi,
As she is dependent on the periodic withdrawals (SWPs), suggest you not to invest in ELSS funds.
Also, investing only Equity funds (for your parent) may not be a good investment strategy. Returns, is not the only parameter for deciding the asset allocation. PPF is one of the best debt/savings oriented scheme.
As she is dependent on this corpus, you may have some allocation in PPF and the existing balanced funds.
Kindly note that returns (12% as opined by you) is not guaranteed and you may incur negative returns as well.
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