Investment - SBI Gold Fund

moobo 1
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Hi Pankaj,

My yearly investment are around 1 L as follows -

  • SBI Magnum Tax Gain MF - 24 k (SIP of 2 k)
  • LIC Bima Gold - 18 k ( sum insured 5L )
  • LIC Jeevan Anand - 12 k ( sum insured 3L )
  • LIC profit Plus - 10 k ( sum insured 1L )
  • PPF - 40 k

I also invested in

  • Around 50k in equity reliance and GTL. Current value : 20 k
  • Around 45k Bajaj CUG plan 2007-09. Current value : 35 k

About me Age : 32, Profession : IT professional , Package : 5L (including HRA 1L), Have : 3 year child , Monthly expense : 25 k , Invest Capacity : 2L , Future Need : My Company, Home, Child Future, Insurance, Mediclaim, Retirement at 60

My wife package : 3 L , Can invest : 2.5 L , PPF investment : 40 k

Pl let me know

  • Action for equity and Bajaj CUG investments
  • Further tax saving and investments to make portfolio strong.
  • Gold fund / physical gold buying
  • Mediclaim/ Pension plan

Since SBI NFO is till 5 sep, pl revert soon if it suits me.

Thanks and Regards

sbi-gold provident-fund pension-plan mutual-fund tax-saving insurance
1 Answers

Your investment plan does not look that good.

First don't treat insurance policies as investment assets. Insurance policies are for covering risk and not generating good returns.

  1. Replace SBI Magnum Tax Gain MF with a better fund like Canara Robeco Equity Tax Saver, HDFC Taxsaver, Franklin India Taxshield, DSPBR Tax Saver or Fidelity Tax Advantage.
  2. If you can surrender LIC Bima Gold, Jeevan Anand and profit plus, do that as they are neither good insurance policies nor good investment product. Plus some of these may not carry income tax benefit from 2012 when direct tax code comes into picture.
  3. PPF investment is good, keep investing in that. But as your age is less than 35, you can decrease amount invested in PPF and put remaining money in NPS (new pension scheme) with more equity portion.
  4. Get an term insurance with sum assured at-least 10 times your annual income plus any pending liabilities like home loan, auto loan etc. You may pick ICICI iProtect policy or wait for some time as LIC is coming with their cheaper online term insurance. You may buy 50 lacs insurance each for you and your wife for term 30-35 years.
  5. Bajaj CUG plan looks like a bad buy. When market returns back, exit this policy and invest in diversified equity mutual fund SIP.
  6. You may invest in gold ETFs but don't more than 10% of your investment into gold as its a speculative product. Rather than Gold mutual fund like SBI gold fund, buy gold ETF from your demat/online trading account, they have less expense ratio.
  7. Get medical insurance cover for your family (you, wife and child). Get atleast 5 lacs cover. But compare conditions before your buy. Apollo Munich and Max Bupa are some of the good ones at this point.
  8. For retirement, child education/future, pension needs start building corpus by investing into a mix of equity and debt funds. At this age you can start 70% investment in equities and 30% in debt based products. You may decrease equity investment by 2% every year as age increases and risk appetite decreases. Best way to do is start SIP in equity diversified mutual funds. For retirement put amount in NPS or PPF.
  9. Get accidental insurance, critical illness cover too.
  10. Get your home and its construction and belonging insured. It won't cost more than 5000 a year, but provide safety against fire, electrical damage, earthquake and theft etc.
  11. Before going for point 8, make sure there is enough liquid amount in safe avenues. Put amount in liquid mutual funds, saving account, fixed maturity plans ans fixed deposits. This amount should be withdrawable whenever you want it and should never show negative returns.
  12. If you have some short term needs like buying home, car, foreign travel etc, Keep an amount separate for that in safe as amount invested in equity may not be positive in short term.

Please let us know if you have questions on these points. Please create a different question for each query on site.

Pankaj Batra5212
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