Creating Portfolio for a newbie

Hi guys, i am 22 yrs old and just started out in my job. I am earning around 39k . I am planning to put around 60-70k in PPF to make up for 1 L tax exemption . Other than that i a thinking of keeping around 20K per month in HDFC sweep-in account . That leaves me around 10-12k per month for investment . Can you guys advice me on where to invest . I was thinking of SIP or ULIP .I had even given a 15k cheque to HDFC SL Youngstar Super Premium yesterday. But after hearing bad things about this ( and ULIP in general) , i am thinking of terminating this plan and taking up Mutual Fund . But i have very little knowledge in this domain , so can you please help me out ..

Thanks in advance

sweep-in shall not qualify for deduction under section 80 c(1,00,000 maximum). For that you shall have to invest in tax saving FDs.


I presume your query is restricted to investment under 80 C only.
Charges of ULIP in initial years are on higher side, this is why ULIPS are profitable in long run only(atleast 8 years and more).Apart from this insurance cover of ULIP is not sufficient.
Now when entry load on MF has been discontinued, distributors are keen on pushing ULIPs instead of MF schemes.

Instead of ULIP one can go for - term policy +ELSS
Plz note that investment in ELSS only shall qualify you for 80 c benefits.
ELSS comes with a lock in of 3 years.
life insurance premium shall also qualifies for 80 c benefits.
you can also invest in tax saving FDs(with alock-in of 5 years), NSC VIII series (5 years lock-in), NSC IX series (10 yeras lock-in).

Presently banks are giving 9.25 % on tax saving FDs. Return on NSC is a tad lower than tax saving FD but NSC can be produces as collateral and you can avail loan on it.
One can create his own pension plan by starting monthly SIP in NSCs.

Apart from 80 C investment, you can further invest Rs. 20,000 in infrastructure bonds under 80 CCF(over and above Rs. 1,00,000).

you can also invest Rs. 15,000 under section 80 D in health insurance premium.

you can get benefit upto 1lakh under 80c, 20k under 80ccf and 35k under 80d. Under the proposed DTC, ELSS might be removed from the benefit. so this is the best year to invest in elss. Tax saving FD's would save the tax on initial investment but the interest is taxable, as far as i know. you can save tax on health insurance premiums upto 35k, your and your parents. My advice would be to invest in elss this year. The slab might be increased to 3lakh from next year, which would give you more room to invest. Get a term plan then, preferably an increasing benefit one which would factor in the inflation. ELSS invest primarily in equities, which have the inherent risk. however younger the age, greater is the risk appetite and the ability to stomach the loss. with increasing age, shift your portfolio from predominantly equity based to a balanced one and then a predominantly a debt based. This should serve all your short and long term goals. Hope this helps

As per section 80 D one can invest Rs. 15000 in health insurance premium (Rs. 20,000 in case of senior citizens).

A further investment of Rs. 15,000 can be invested for buying health insurance for parents (Rs. 20,000 in case, when parents are senior citizens).

But buying insurance policy for parents should only be done if it is required.
Parents may be already covered by self or through employer or policies bought by other siblings.

So buying insurance policies for parents should be done only if it is required.

You can visit this site valueresearchonline.com ...and select some of the top rated mutual funds also Tax related funds....there are some nice articles too that will give u an idea of mutual funds and where to invest