MIP or FDs

[life2007]

Hi

Thank you so much for your advise. I am already investing in HDFC Prudence regularly and also started Reliance Regular Savings fund but not balanced but Equity fund.

Just one more query. When you say book profits is it in the following manner.

Ok for eg I invested 1000 and it grew to 1500. So booking profits means redemption of Rs. 500 right? Now logically what happens after I withdraw. Should I wait for the market to correct and then reinvest, but then we all say timing market is not possible. So what If I book and reenter in few days, then there will be no major change.. I have just done a fuitle exercise.. Surely, I am thinking something wrong here.. Can I know that please.

Regards

Jeet

This is all that one needs to know. Beyond that, everything else is not necessary. This is exactly the point that SEBI is trying to drill into the brains of big shots who manage these funds. Their job is to make a complicated stuff into something simple for a layman to understand.
Tell me this, did you start walking in 1 day? No right... neither did I. When I was new in driving cars, I would not see anything but the road in front and the rear view mirror. Nowadays, there is a cell phone in 1 hand and a coffee cup in the other. Needless to say, changing radio stations can be done with an elbow..
Start investing in a few trust-worthy funds that I have suggested earlier... I won't change it. Its ok to book profits and reenter. A few conservative investors invest initially only in FDs and postal savings (for capital protection) and invest the returns in midcap stocks for better returns. Remember, FDs return zero or even negative returns after adjusting for inflation. Everyone needs to own some equity.
Another thing with equity is that you might see the downward slide once in a while. You may get into a tendency to sell... do the opposite... buy more and hold your stocks. In order to protect against such downward trends, increase your SIP investments in these funds every year.

 

[life2007]

Yes, many things common here and possibly you are also in the same income bracket and life style as me because I notice you are after regular income like me

I think JM contra fund was a good choice initially because I remember a highly reputed manager taking over it after leaving from SBI where he was dealing with a highly successful fund, I think magnum contra. Hmm, his name was I think some Sarbhwal, so the market at that time indicated this fund will shoot up under his guidance. Being very new, never knew the basics and primary rule was not to invest in NFOs, thanks to this forum, I have learned so many things from there on.

Seems you have done extensive homework and planning a great deal. I am trying to but I think loosing my way out here. Luckily, since 2008, I am investing in MFs regularly and slowly but gradually the capital is increasing. My invested MFs are DSP Equity, HDFC Prudence, HDFC Top 200, Reliance Regular Savings Equity, Sundaram Tax Saver & SBI Tax Gain. I have some holdings in Magnum Contra, Birla 96, DSP Tiger. These 3 funds will be churned and absorbed in above funds sooner or later.

Can you tell me what tax implications are for you in Reliance MIP? Have you gone for dividend option or growth?

I am back to where I am .. What shall I do with 2 lacs lying idle in savings bank account. Honestly, I want to invest in two MIPs. Reliance MIP and HDFC MIP Long term (Dividend) or may be growth not sure again. The idea is to come out from the traditional FDs partially so as to beat inflation.. But tax part? I think 10% right? Ok, If I invest 2 lacs today in these MIPs and do not touch it for a year.. how much tax I have to pay OR if I take dividend option how much tax I have to pay?

Also, I wanted to try out STPs, but again it is bit complicated. The moment you withdraw (STP) from a debt fund to a desired equity fund, you have to pay short term tax gain right? So If I was to periodically do STP each time tax is there?

You are already doing these, just give me basic highlights please if you can. I know I cannot request for too much detailed answers. I am lengthening my story because I want to make the reader clear what is going in my mind.

Finally, this my planning. Want to keep it simple.. invest and forget mode:

1) MFs Diversified - Capital Growth
2) FDs - Meet immediate unexpected expenses OR allow it to grow with the
available interest.
3) PPF - Retirement corpus
4) MIPs- Not started, wanting to and this why I started this post.
5) Gold ETF - Not started, will think seriously. next in queque.
6) Post Office MIP - Not sure, if the Equity MIPs work out, then I think I will skip
this because, PPF, FDs, MIPs.. too much on debt component.. Age is still
there, so I think I will be little above conservative nature.
7) Direct Equities - Not started yet. Only few top rated funds.. Invest and
forget mode.
8) Purchase Land - Dont know when ! Whenever a windfall happens, at the
moment can only fantaise about it :clap:


That is it.. Just sharing with you and others too.. Tell me your comments.

Regards

Jeet

Hmm its really nice to know life2007 a lot seem to be common even i invested in JM Contra a very bad inveestment yet to sell and redeploy the money...

Interesting thing is I started with Equity, moved to equity diversified and now i am using balanced funds and regular income and fds for future... so following is what i can share m doing right now

I like HDFC and Reliance as fund house and few others

1. STP into HDFC Prudence + Reliance Growth I regularly invest into this funds more than 10k every correction of market here its STP cuz i am not doing any SIP also i plan to deploy some money in liquid funds and do regular transsfer

2. Icici dynamic for future divident yeild m invested using STP

3. Post office Savings scheme : this is i am looking now to have a regular income of 3000 after 4.5 lakh is deployed this regular returns will be invested back in equity diversified funds

4. Reliance MIP : i am invested into it slowly increasing the amount to get monthly income of atleast 3000 per month so might need 3-4 lakh of investment

5. SIP in Reliance REgular savings Equity this will be regular 5-10 k per month for 10 years or more ..

and this is my future strategy apart from what i hold which i churn regularly,,

Also I am invested directly into equity.. good companies regular basis

 

[surfingminds]

Yes,
A lot of things common suggest we should be from similar back ground and income or age or going through the investment learning curve, Its good to share some of experiences and learn from each other.

I am 31 from a city of above 10 lakh from a typical indian middle class family , Started investment when i got some extra liquid when moved out to Gulf for work. so at the moment NRI status never worried about taxes but it seems direct tax code their is proposal to tax NRI. But investments do have taxes thats what when i did fd and earned some interested it was heavily taxed i should have broken the fd in such a way that the interest never crossed 10k per anum below which you are not taxed.

I made lots of mistakes like had invested in Mutual funds more than 12 and stocks more than 40 but now reducing it.
Should follow basic simple pricipals, Invest in good equity diversified funds and some balanced funds should not bemore than 4-6 funds and for regular income invest in MIP or Post office saving scheme ,
I am also looking opportunity to enter real estate and gold but i never liked them gold can only act as insurance to your portfolio and land i believe is hyped and in bubble zone when it comes down i will buy.

so keep things simple and do let me know specific queries where in i can help
for the tax part in fact i want to get into more details what will happen after direct tax code..

Ok regading STP i don't think their is any tax when you switch tax only applicable when you redeem.. However i need to confirm swithing through the same fund house is better in case you redeem and redeploy then you have to pay tax

so better go with one fund house and do stp or switch never take out or redeem your moeny .

sam

 

[life2007]

Hi Sam

Yes, quite lot common things.

There is one big difference too.. You are an NRI and I am a desi. I an older than you 37 (nearing 38:-( ).

Yes, I am also from that typical indian family where we were taught orthodox values and also that typical extra cautious conservative type of saving. My dad also invested in safest avenues like FDs or Post office schemes in fact never knows even today about shares and Mutual fund. But I knew for sure, he ignored inflation part and now realize that the purchase power of the amount is considerably reduced. This is where I decided to take up my financial issues in my hand so that at around his age, I will be bit more in comfort zone. Thanks to such wonderful forums, I am much better than just couple of years ago in terms of knowledge.

Ok regading STP i don't think their is any tax when you switch tax only applicable when you redeem = I think this is wrong, because I learnt switching fund is as equal to redemption. May be because of your NRI status you are not getting affected.. but not sure though.

OK let us zero in only one query. Just trying to understand tax implications if I invest 2 lacs right now in two MIPs.. ie. HDFC MIP long term and Reliance MIP. Just toying around few things.. dont want to keep on accumulating FDs which actually gives negative returns given the state the inflation is at the moment. Neither want to lock it in Post office MIP for 6 long years, since I might need to change plans after couple of years.. Investing at reasonable pace in equity diversified funds so dont want to put this huge corpus over there too. So that leaves me the only option to invest in MIPs Equity unless you or some other expert suggests another viable effective option.

Please pour in your comments to this single minded query at the moment.

Thanks

Jeet

Yes,
A lot of things common suggest we should be from similar back ground and income or age or going through the investment learning curve, Its good to share some of experiences and learn from each other.

I am 31 from a city of above 10 lakh from a typical indian middle class family , Started investment when i got some extra liquid when moved out to Gulf for work. so at the moment NRI status never worried about taxes but it seems direct tax code their is proposal to tax NRI. But investments do have taxes thats what when i did fd and earned some interested it was heavily taxed i should have broken the fd in such a way that the interest never crossed 10k per anum below which you are not taxed.

I made lots of mistakes like had invested in Mutual funds more than 12 and stocks more than 40 but now reducing it.
Should follow basic simple pricipals, Invest in good equity diversified funds and some balanced funds should not bemore than 4-6 funds and for regular income invest in MIP or Post office saving scheme ,
I am also looking opportunity to enter real estate and gold but i never liked them gold can only act as insurance to your portfolio and land i believe is hyped and in bubble zone when it comes down i will buy.

so keep things simple and do let me know specific queries where in i can help
for the tax part in fact i want to get into more details what will happen after direct tax code..

Ok regading STP i don't think their is any tax when you switch tax only applicable when you redeem.. However i need to confirm swithing through the same fund house is better in case you redeem and redeploy then you have to pay tax

so better go with one fund house and do stp or switch never take out or redeem your moeny .

sam

 

[sibumajumdar]

Hi Sam

Yes, quite lot common things.

There is one big difference too.. You are an NRI and I am a desi. I an older than you 37 (nearing 38:-( ).

Yes, I am also from that typical indian family where we were taught orthodox values and also that typical extra cautious conservative type of saving. My dad also invested in safest avenues like FDs or Post office schemes in fact never knows even today about shares and Mutual fund. But I knew for sure, he ignored inflation part and now realize that the purchase power of the amount is considerably reduced. This is where I decided to take up my financial issues in my hand so that at around his age, I will be bit more in comfort zone. Thanks to such wonderful forums, I am much better than just couple of years ago in terms of knowledge.

Ok regading STP i don't think their is any tax when you switch tax only applicable when you redeem = I think this is wrong, because I learnt switching fund is as equal to redemption. May be because of your NRI status you are not getting affected.. but not sure though.

OK let us zero in only one query. Just trying to understand tax implications if I invest 2 lacs right now in two MIPs.. ie. HDFC MIP long term and Reliance MIP. Just toying around few things.. dont want to keep on accumulating FDs which actually gives negative returns given the state the inflation is at the moment. Neither want to lock it in Post office MIP for 6 long years, since I might need to change plans after couple of years.. Investing at reasonable pace in equity diversified funds so dont want to put this huge corpus over there too. So that leaves me the only option to invest in MIPs Equity unless you or some other expert suggests another viable effective option.

Please pour in your comments to this single minded query at the moment.

Thanks

Jeet

Dear, What i did was invested my retirement benefit to HDFC MIP LT & Reliance MIP for 3 Lacs each in Growth fund. After 1 year i shall opt for STP . So i can avoid tax part.You can think of this without going for much complecations. As i am aged iam shifting Equity funds to Balance / MIP Funds like HDFC Prudence, Reliance Reg Sav Balance , BSL 95 , Can Robeco Bal & DSPBR Balance beside above MIPs...SLM uncle

 

[yodlee99]

Hi

Thank you so much for your advise. I am already investing in HDFC Prudence regularly and also started Reliance Regular Savings fund but not balanced but Equity fund.

Just one more query. When you say book profits is it in the following manner.

Ok for eg I invested 1000 and it grew to 1500. So booking profits means redemption of Rs. 500 right? Now logically what happens after I withdraw. Should I wait for the market to correct and then reinvest, but then we all say timing market is not possible. So what If I book and reenter in few days, then there will be no major change.. I have just done a fuitle exercise.. Surely, I am thinking something wrong here.. Can I know that please.

Regards

Jeet

You can divide half of your money equally and invest in liquid funds like HDFC HiInterest Short term plan and Reliance Medium term plan. Then, do a weekly STP of 1000Rs into HDFC Prudence and Reliance Reg savings balanced fund for 50 weeks. These 2 are very good funds and have been consistent.
With the other half, invest in MIPs for some monthly returns.
For long term growth, u can continue investing via SIP or STP without any redemption. Its difficult to time the market and redeem or reinvest... lets face the fact. Remember that time in the market is more important than timing the market.

Good luck!

 

[surfingminds]

Hi Sam

OK let us zero in only one query. Just trying to understand tax implications if I invest 2 lacs right now in two MIPs.. ie. HDFC MIP long term and Reliance MIP. Just toying around few things.. dont want to keep on accumulating FDs which actually gives negative returns given the state the inflation is at the moment. Neither want to lock it in Post office MIP for 6 long years, since I might need to change plans after couple of years.. Investing at reasonable pace in equity diversified funds so dont want to put this huge corpus over there too. So that leaves me the only option to invest in MIPs Equity unless you or some other expert suggests another viable effective option.

Please pour in your comments to this single minded query at the moment.

Thanks

Jeet

Hmm any ways being NRI was always an advantage in some aspects but soon will be taxed so m getting ready to save some but if its less don't mind to pay to gov as its for us

Btw U are right move in equity on correction through sip stp
balanced funds are goood way to even invest lumpsum as they switch between equity and debt if smart

MIP is ok for regular monthly income but if you don't want then balanced fund would be bettter than MIP. btw was just wondering if investing in 2 MIP is good idea cuz i don't think their much of difference u can only think of reliance MIP unless large sum of money is to be invested cuz remember one thing multiple funds and frequent transactions can lead to tax implication and charges but sometimes breaking your investment can help save tax like in case of FD .


why don't you seee a financial advisor and get more expert advice and share his feed back with us to.

 

[life2007]

Thank you so much for your valuable inputs. I will focus now and make some plan.

One final query..Investing in only MIP is fair enough or can I opt for two of them ie. HDFC Long Term and Reliance MIP? I plan to divide the amount between then whenever I need to allocate to debt part. Pls advise..

Thanks

Jeet

You can divide half of your money equally and invest in liquid funds like HDFC HiInterest Short term plan and Reliance Medium term plan. Then, do a weekly STP of 1000Rs into HDFC Prudence and Reliance Reg savings balanced fund for 50 weeks. These 2 are very good funds and have been consistent.
With the other half, invest in MIPs for some monthly returns.
For long term growth, u can continue investing via SIP or STP without any redemption. Its difficult to time the market and redeem or reinvest... lets face the fact. Remember that time in the market is more important than timing the market.

Good luck!

 

[yodlee99]

There is no right or wrong answer to this and IMHO, it depends on the SIP amount. If you have 4K or less per month, do weekly SIP. If you have >4K per month, split it among the 2 MIP funds.
All these depends on your gut feeling and try by splitting equally among the 2 and see how it goes. Check back with us in an year's time.