[carboy]

Originally Posted by Jaguar

Your statement that debt fund NAV's are out of whack but only the debt fund in my portfolio is positive currently. Shouldn't it be the worst performer?

Just because they are out of whack, why would it mean that they perform worse than your equity?

Originally Posted by Jaguar

The premium for 1cr insurance would be lower say 10k for a 25-year-old whereas it would be about 15k for a 35-year-old.

This premium you quote (10k & 15k) is for how many years of term insurance?

[adithya.kp]

The fund belongs to the long duration debt fund category. The performance is good because the g-sec bond yield fell to 6.49 from 7.5. In fact the yield was above 8.0 in 2018.

Originally Posted by Jaguar

I am confused. The only fund in my portfolio that is in green is ICICI Prudential Long Term Bond Fund
Not able to correlate with what you have said.


Isn't this a very bad advice to give to a young person?

1. Do not mix investment with tax saving. Even if there is no requirement to invest in ELSS for tax purposes, one should always make it a point to invest the disposable cash in hand. Not leave it lying in a savings account.

2. It is always better to take the term insurance when you are young to lock in the lower premium. I remember reading somewhere that if you start your term insurance after 30, the premium would be significantly higher.

3. And it is wrong to assume that someone young doesn't have any dependents if he/she is not married. We need to think about aged parents too.

[Jaguar]

Originally Posted by carboy

Just because they are out of whack, why would it mean that they perform worse than your equity?

This premium you quote (10k & 15k) is for how many years of term insurance?

I am not comparing against equity. I was expecting these also to give negative returns and your point about them being out of whack made sense until I looked at my portfolio this morning.

Anyways, adithya.kp has clarified.

Annual premium for cover up to 60 years. These are just dummy figures to indicate the difference.

[carboy]

Originally Posted by Jaguar

I am not comparing against equity. I was expecting these also to give negative returns and your point about them being out of whack made sense until I looked at my portfolio this morning.

I think you are misunderstanding what I meant by "out of whack". Read in the context of the rest of my comment there. "Out of whack" means different from price calculated of the bonds using present value calculations with the present discounting rate.

Originally Posted by Jaguar

Annual premium for cover up to 60 years. These are just dummy figures to indicate the difference.

How can you compare using dummy figures? Check actual figures & compare. One guy is paying premium for 25 years & another guy is paying premium for 35 years. Also factor in time value of money for those unnecessary 10 years.

[Jaguar]

Originally Posted by carboy

I think you are misunderstanding what I meant by "out of whack". Read in the context of the rest of my comment there. "Out of whack" means different from price calculated of the bonds using present value calculations with the present discounting rate.
How can you compare using dummy figures? Check actual figures & compare. One guy is paying premium for 25 years & another guy is paying premium for 35 years. Also factor in time value of money for those unnecessary 10 years.

That's why I said I didn't understand your initial post.

My figures are just to illustrate a point. A few years back, I had read an article with proper calculations showcasing the difference. Will share it if I can find it.

[Sumeru97]

Originally Posted by Jaguar

I am confused.
-----
3. And it is wrong to assume that someone young doesn't have any dependents if he/she is not married. We need to think about aged parents too.

Only someone from the Mutual fund industry may think my advice is bad, as reality is bad for their livelihoods

1. ELSS - If there is no tax benefit involved, why would anyone want to invest in an ELSS fund? One can always build a build their savings habit by just putting their extra money in a high interest savings account with sweep-in facilty, or start an RD or FD. It beats the returns of most ELSS funds over the past few years. Also, your money is always accessible to you, and up to 5 lakhs of your capital per bank, is insured by the Govt.
If he has interest in investing in equity, he can alway instead start investing in a low cost Direct Index fund.

2. The problem with term insurance at such an early age is there is a coverage limit upto 10 times your current CTC. In case you want to increase your coverage limit later , there is no big cost advantage than taking a term cover at a later stage.

3 I assumed his parents are not dependent on him, as he specifically mentioned he has no student loan. I stated it is an assumption, not a fact. Maybe I am wrong, but it is up to him to correct me. In the meantime, both you and I can only make assumptions.

[carboy]

Originally Posted by Jaguar

A few years back, I had read an article with proper calculations showcasing the difference. Will share it if I can find it.

Most likely those calculations didn't consider Time Value of money.

[rayjaycleoful]

Originally Posted by carboy

PPF is the best debt instrument available in India. It's Exempt-Exempt-Exempt. Unless you plan to invest 100% of your money in non-debt investments, I would advise PPF. Even if you plan 10%-90% distribution of your debt & equity, that 10% should be in PPF.

Thank you for input. Read up on PPF, discussed with family, and with inputs from this forum have decided for it to be a majority of my investments. I also didn't know about being able to withdraw it partially before 15 years.

Originally Posted by sansvk

Stay away from insurance linked products.
ELSS is a good alternate to build your equity portfolio. Both funds are good. Surplus money can be put into an Index funds.

Thanks for your input. Have decided to stick to EPF/vPF, PPF, Gilt and a little both of pure blue chip equity. The ELSS funds don't seem to be yielding great results, as is with equity in general.

Originally Posted by warrioraks

Here is the list of options I can suggest in addition to what you already considered. Just make sure you do not put all eggs in one basket and have a spread across debt and equity.

1. Index funds
2. PPF and VPF (Fantastic debt instruments)
3. NPS Tier 1 account (tax benefit of up to 50k)
4. NPS Tier 2 account

In both NPS accounts, you allocate money across Corporate debt, G-Sec and equity.
Tier 1 corpus can be withdrawn at age of 60 (so more of a retirement fund) but Tier 2 works pretty much like mutual funds so withdraw anytime.

Thanks! Great suggestions I will take up. Had no idea about Tier 1 account. It is really tough to find information put out clearly like this online.

Originally Posted by Sumeru97

As you are only 22, I assume you are not (yet) in the higher tax bracket. In that case, you can opt for the new tax regime, and you need not do any mandatory investments.
Just save your money in a high interest savings account like in IDFC First bank, and chill.

You're thinking like I was 3 days ago, like a 22 year old.
The new tax regime hasn't really come into effect yet,(at least in mine and a few companies from what I've heard) nor does it make sense unless you spend everything you take home. Not very comfortable with expecting great results from a bank account, and I feel using the deductions inculcates good saving habits.

[Jaguar]

Originally Posted by Sumeru97

Only someone from the Mutual fund industry may think my advice is bad, as reality is bad for their livelihoods

1. ELSS - If there is no tax benefit involved, why would anyone want to invest in an ELSS fund? One can always build a build their savings habit by just putting their extra money in a high interest savings account with sweep-in facilty, or start an RD or FD. It beats the returns of most ELSS funds over the past few years. Also, your money is always accessible to you, and up to 5 lakhs of your capital per bank, is insured by the Govt.
If he has interest in investing in equity, he can alway instead start investing in a low cost Direct Index fund.

If you go back to my post, you will see that I never advised him to invest in ELSS or MF even. My objection was to your comment, "just park the money in some high yielding account and do nothing."

And since you have called out, let me give a disclaimer. I make software used by fund trading platforms. Not for any Indian clients though. You can decide whether I belong to the MF industry or not

[arvindmanju]

On the wake for Covid-19 and FM making amendments to tax saving investments. where Tax-saving investments for FY 2019-20 allowed till June 30, 2020.
If one invests in ELSS today, will that investment be consider for FY 20-21 or do we have to wait till 1st July to make FY 20-21 investment?



thanks,
Arvind

[Sumeru97]

Originally Posted by arvindmanju

On the wake for Covid-19 and FM making amendments to tax saving investments. where Tax-saving investments for FY 2019-20 allowed till June 30, 2020.
If one invests in ELSS today, will that investment be consider for FY 20-21 or do we have to wait till 1st July to make FY 20-21 investment?



thanks,
Arvind

You can show the ELSS investments for either one of the years. You can submit the investment proof till June for FY 2019-20, if you have some balance left in your 80c and have not yet filed your income tax returns.
Otherwise you can treat it like you normally would and submit the proof for your FY 20-21 filing.
Of course, one cannot declare the same transaction for both years. Though I am not sure how the IT dept can keep track of this (maybe through the unique transaction number).

[Striker]

Hey Guys,

Since the markets have fallen to levels that was seen probably 5-6 years back, I have tweaked my investment strategy by doing the following:

1. Select a highly ranked large cap funds managed by a reputed and proven MF company / fund manager (ex. Axis Bluechip Fund managed by Shreyash Devalkar)
2. Time the market to make small lump-sum purchases on a weekly basis. Basically short burst purchases to capitalise the market volatility using the " principles of averaging down"
3. Continue the above trend to make consistent lump-sum investments for the next 2-3 months until the coronavirus sentiments are improved and market stabilizes
4. Stay invested for the next 3-5 years before planning for redemption (based on prevailing market conditions)

Direct investing in shares would be the most ideal, but I'm just a bit lazy to open a demat account and stuff to get started

Note that the above is over and above my regular investments through the SIP route. To the investment gurus out there, would be helpful if you can share your thoughts on this?

[JMaruru]

Originally Posted by Striker

Direct investing in shares would be the most ideal, but I'm just a bit lazy to open a demat account and stuff to get started

So how are you doing this 'weekly' investments now, in absence of a demat account?

[Striker]

Originally Posted by JMaruru

So how are you doing this 'weekly' investments now, in absence of a demat account?

Investing in mutual funds directly via logging into their website.

[ghodlur]

Experts a query related to MF SIP's.

I recently missed a SIP in one of the MF's and reason for that is I didn't register the URN generated on the MF website during SIP registration in my manage biller's section in my Savings account bank. I had in the past experienced this pain. Is there any easier method of ensuring that this slip doesn't happen. As a precaution I have started registering the SIP for 2 yrs as against earlier mindset of 1 yr. Unfortunately for me the SIP registration dates have been different and used to track them in Excel file. But that process looks outdated now.

Anybody doing differently?