Investment Basket

[life2007]

Hello Friends

I am totally new to invest in MFs. I have about 50K to invest. I think I am not suitable for SIP since I dont have fixed income and hence am not sure whether I will be able to manage each month or 3 months.

For the last 10 days, I have been reading several articles here, personalfn, valueresearch to get accustomed and try to pick up some good funds for long term ( 8-10 years).

I am still not fully aware of terms like large, mid or small caps, risk exposure., risk weightage in portfolio etc etc.. However I have made an attempt as below for investment and would like to have few expert advice to see if i am right in my decisions. Please also mention whether the funds I have choosen is of high or moderate risk. Your comments and advice would be immensely helpful to me. After all just like you, it is my hard earned money and savings......

CORE:
1) Sundaram BNP Paribas Select Focus-G = 5000.00
2) SBI Magnum Contra = 10000.00
3) DSMPL TIGER = 5000.00

BALANCED:

1) Tata Balanced = 5000.00
2) HDFC Prudence = 5000.00

ELSS:

1) Principal Tax Saving = 5000.00
2) HDFC Tax Saver- G = 5000.00

Aggressive:

1) Reliance Regular Savings Equity = 5000.00
2) JM Emerging Leaders-G = 5000.00
OR UTI Infrastructure


Please also advice if I want to do an SIP for one or two funds from the above after the first inital lumpsum amount, is it possible??

Thanks in advance

Regards

Jeet

[Vicky78]

I am not a big fan of personalfn. But value research is good. Go for 6 month SIP of your 50000

Core

Go for at least 1 large cap oriented and one multicap fund. This would be the core of your portfolio. .DSP ML Tiger is a good fund but it cannot be the core of your portfolio as it is an infrastucture fund. Sundaram Paribas Select Focus, is an ok Fund but given that it invest in 10-20 stocks, in my personal opinion it lacks diversification and hence not suitable for a core holding. Also Decide the the amount of debt component you want do invest.

1. Magum Contra or Franklin Prima Plus or Birla Sunlife Frontline Equity
2. DSP ML Equity or Birla Sunlife Equity

ELSS

IMO, ELSS should be a large cap oriented fund. But if you are willing to take the risk, Principal tax Savings is good. Again choose 1 ELSS Fund.

Balanced Fund

Your choices of balanced fund is great. But choose one. Tata Balanced is more aggressive than HDFC Prudence.

Aggressive

DSP ML Tiger will fit well here.

So here is a portfolio, which will cover various market caps and different themes

1. Principal Tax Savings
2. DSP ML Tiger
3. DSP ML Equity
4. Magum Contra or Franklin Prima Plus or Birla Sunlife Frontline Equity
5. Tata Balanced or HDFC Prudence

5 equity funds are more than enough and they provide ample diversification. Being invested in more than 5 funds will cause the portfolio to act like one huge index fund.

[life2007]

Hello Vicky,

Thanks in tons for such an informative and clarified reply. You are great

Just one question. You said to go for 6 month SIP .. What does that mean.. I am sorry, I did not understand, Could you describe it with reference to your choice of funds please.

How much funds do you advise to allocate in each fund. 10 K in each for the 5 funds you have mentioned??

And also, please tell me how to invest in future. For example after putting 50K in the above funds, I get another 10K after some time. How should I allocate, I mean in what manner ?

I know it is bit type of mouthfeeding.. but cant help it.. i am so naive in all this, all I know selecting a good portfolio and sticking with it is like winning half the battle.

Thanks once again

Regards

Jeet

[life2007]

Hello Vicky,

Thanks in tons for such an informative and clarified reply. You are great

Just one question. You said to go for 6 month SIP .. What does that mean.. I am sorry, I did not understand, Could you describe it with reference to your choice of funds please.

How much are you advising to allocate in each of the 5 funds you have mentioned? 10K in each at the moment??

And also, please tell me how to invest in future. For example after putting 50K in the above funds, I get another 10K after some time. How should I allocate, I mean in what manner ? Should it be evenly distributed?? i.e 2K in each fund???

I know it is bit type of spoonfeeding.. but cant help it.. i am so naive in all this, all I know selecting a good portfolio and sticking with it is like winning half the battle.

Thanks once again

Regards

Jeet

[life2007]

Hello Vicky,

Thanks in tons for such an informative and clarified reply. You are great

Just one question. You said to go for 6 month SIP .. What does that mean.. I am sorry, I did not understand, Could you describe it with reference to your choice of funds please.

How much are you advising to allocate in each of the 5 funds you have mentioned? 10K in each at the moment??

And also, please tell me how to invest in future. For example after putting 50K in the above funds, I get another 10K after some time. How should I allocate, I mean in what manner ? Should it be evenly distributed?? i.e 2K in each fund???

I know it is bit type of spoonfeeding.. but cant help it.. i am so naive in all this, all I know selecting a good portfolio and sticking with it is like winning half the battle.

Thanks once again

Regards

Jeet

[life2007]

Sorry, I dont know.. the messages have been repeated by me by mistake

[Vicky78]

SIP is is systematic investment plan. Where you invest a portion every month.

So 50000/6 = (approx) 8000 per month

So invest 1600 per month in each of the fund. you would have about 10000 in each fund at the end of 6 months.

Principal Tax savings - 10000
DSP ML Tiger - 10000
DSP ML Equity - 10000
Magnum Contra - 10000
HDFC Prudence - 10000

[life2007]

Thanks Vicky once again

Just few last questions please!

1) How do I allocate if I get some additional surplus amount within these 6 months. Should
the distribution amount be equal within these funds ? Suppose I commit 1600.00 SIP to
each of these funds. Can I increase the amount in a particular month and then go back
to 1600.00 the next month.


2) Also in future , If I am understanding it correctly, I should stick to these 5-6 months
only and as and when I get a surplus amount to invest, I should be allocating to these
funds only. Am I right ? (Ofcourse, needless to say, I should be watching the market
situation quite often)

3) What happens to SIP plan after 6 months. I may have more money to invest or I may
not have during the 7th month. The nature of my income is not continous as i am self-
employed. I may get a good sum during a particular month or I may hardly any sum. For
example, as stated earlier I have 50K surplus amount accumulated in my savings right
now, but I am not sure how much will be there next month. Please advise.

Thanks

Jeet

[life2007]

Hello Vicky

Sorry once again, a quick query. I was finalising the funds for my portfolio and was once again checking each of the funds you mentioned in the value research.

Are you talking about DSP ML Equity- D or DSP ML Equity -G . The dividend option was launched way back in April 1997 and the growth option only this year in month of June.

Thanks

Jeet

[life2007]

Dear Mr. Vicky....

I researched for 5 to 6 hours and am building my portfolio within your lines of advise. I am writing this because I want to thank you immensely for making my task easier.

Please do reply to my earlier queries at your convenience.


1) SBI Magnum Contra (Large Cap) = 10000.00 Core
2) Birla Sun Life Equity - G (Multi Cap) = 10000.00 Core
3) HDFC Prudence (Mid Cap) = 10000.00 Balanced
4) Principal Tax Savings (Mid Cap) = 10000.00 ELSS
5) DSMPL TIGER-G (Large Cap) = 10000.00 Aggressive
6) Sundaram Select Focus-G (Large cap) = 10000.00 Aggressive

Hope this combination works.

The only factor though I cannot afford but still going ahead is the nature of some of the stocks. The risk weightage seems to be more in the above portfolio. I guess Birla Equity and HDFC Pru are the safest. SBI Contra is somewhat volatile, The rest 3 are with risk above average.

Anyway, thanks once again.... Please do reply my earlier query of SIP at your convenience..

Regards

Jeet