personal finance help?

1. I am a 46 years old Army Lt colonel . My core investment is my provident fund (25k per month). Total balance is about 13 lac. I have opted to put my sixth pay commission arrears back in my provident fund. I have 2 sons in 10th and 6th class respectively. I have a 3 bedroom flat in sector 20 panchkula which require some woodwork and complete furniture (5 to 7 lac expenditure). I am not worried about pension and insurance as I am adequately covered by the Army in both. I started investing in mutual funds in 2007 only to be jolted in 2008. Presently I am invested with 2.5 lac in mutual funds with 90 percent in diversified equity as under:-
(a)BSL frontline Equity G (SIP @2k per month)
(b)DSPBR Equity – D
(c)ICICI Pru Infra-D (switched from Pru Dynamic)
(d)IDFC Premier Equity –G
(e)Kotak tax Saver-D
(f)Reliance Growth –D (SIP @2k per month)
(g)Reliance RSF Equity-G
(h)TATA Pure Equity –G (switched from TATA Indo global Infra)

2. I also have a Bajaj Allianz unit gain ULIP with 3 premiums paid @40k per year and LIC Jeevan Suraksha pension policy No122 with annual premium of 9752 Rs. I also have a LIC Jeevan Surabhi money back policy with last premium pending in [email protected] per year. I have the following queries:-
(a)Should I decrease my provident fund and increase equity exposure.
(b)Should I continue with my Bajaj Allianz ULIP next year.
(c)Should I increase my SIP amount in BSL and Reliance Growth/start any other SIP/ fatten up my existing portfolio.
(d)Should I invest lumpsum in magnum Contra.
(e)Where should I invest about 1 lac more in equity presently in my bank that I can spare.

4 Replies to “personal finance help?”

    (b) What for you need ULIP since you say you are adequately covered by army pension and medical benefits?
    (c) It is always a good time to invest in SIP. But I choose SIPs that allow me to invest 5 times a month. This allows me to somewhat leverage price averaging. Extending the idea, only two funds in India have daily SIP but the minimum amount is Rs.300/day which is beyond my range.
    (d) Why go for lump sum. either invest in SIPs or await the next decline. It may be round the corner.
    (e) Good, defensive stocks like FMCG, Pharma.

    All the best colonelji.

  2. Without going in detail, Here are few comments on your portfolio
    – Short & simple
    – SIPs are mostly in good funds.
    – Well insured (as per your estimate)

    – You have few not-required policies but then since you are already during the last periods of the policy, there is not much you can do.

    – Since you have about 14 years to retirement( assuming 60 years for retirement), you can afford to stay invested in exisiting SIP (all equity) if you are comfortable. As a safer option, you should switch some SIPs to balanced funds.
    – For higher education of your elder son(next 2-4 years), you need to keep money in FD, liquid fund etc. For this you can use the 1 lac in your bank account. You also need to put the amount you get next year (say about 1+ lacs)on maturity of your money-back policy in fd or liquid fund. That gives you about 2 lacs for elder son’s higher education. You can also stop paying ULIP premium(don’t surrender it. let it grow) which will give you another 80,000 to 240,000 towards elder son’s education. That should be a good staging point for his education finances. For any deficits, you can dip into your mutual funds or go for educational loan (if you get subsidized loan).
    – For your younger son’s higher education (needed after 6-8 years), you can start a SIP of say 7500 in balanced funds( hdfc prudence would be good opton). This will give you a corpus of 6-8lacs. Add to this the 40k/annum you can invest after your elder son’s education is financed, you will pretty much cover the cost of your younger son’s education without extra efforts.
    – Other than switching some SIP to balanced, you don’t need much changes in SIP. DONOT invest in any thematic, contra, midcap or small cap fund. Stick to largecap, diversified equity and balanced funds. Switch out of ICICI pru infra to balanced fund for sure.
    – For the 5-7 lacs needed towards woodwork, you may postpone it for 2-3 years if you can till your elder son get into college. But decide when you want the renovation to be done and keep/save the money for this in safer instruments(not equity funds) if this is in less than 5 years.

    You may talk to a financial planner if you need.

  3. 1. To provide a comprehensive answer interactionwith a Financial Planner is reqd as addl inputs are needed. This would relate goals and investment options besides giving a better understanding of what you are upto. Relying on pension and AGIF may not be a across the board answer.
    2. Increase in PF is not desirable today; the way things are with new Tax code due this (DSOPF) may be the only option so then you can enhance.
    3. Any surrender before 10 yrs will be a loss making propsition. Loss keeps decreasing 3 yr onwards.
    4. SIP/SBI Contra/ Investible Surplus: Mkt is still volatile so lump sum investments are not desirable. Increasing SIP or Contra depends on your goals/expectations from the investments.

    Thinking of options is a good start & wish you Happy Investing


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