Sir I have Rs. 100,000 to invest, what should I do? Want to invest for 7 years…

Answer: In such turbulent times you should not invest in an equity scheme. So please invest this money in a clutch of balanced fund – Franklin Templeton Balanced fund, Reliance..fund (do not remember which), Hdfc Prudence fund, and DSP Blackrock balanced fund.

I would have done it as follows:

My take: What is your age? and how long can you not worry about this and what is the amount of fluctuation that you can take.

If you can take a 25% fall look at equities – be ready for a 4500 nifty. Do a SIP for 6 months – not 2 years. Then relax. And it better be an equity fund like Franklin India Bluechip, Icici prudential discovery, Hdfc Top 200 or Hdfc Equity fund.

If you think this is too confusing, put in Templeton India Index fund.

Second question

Is Franklin India Bluechip a good fund to invest?

Answer: Yes, it is a good fund and it has given a return of 84% last year. It has fallen less than the index during bad times and has given a 25% return over the life of the fund.

My take:

I can swear that when it was under-performing, it was touted as a bad performer and another business channel was saying ‘it is now not a good fund, come out of it’. Luckily one editor and I discussed this particular scheme – and she said ‘I am happy with its performance why is this channel saying sell?’

She was then a kid…I said ‘Hey kid welcome to the world of financial journalism’..I will not name her here…but I hope she comes and comments, she is a regular blog reader anyway!!

 

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  1. Most business channels will give you advice based upon projecting what has happened in the near-past. Most people are pleased with that and approve of that too. Long-term is actually a long-(short-term).

    Your example of telling about the returns of Franklin Prima fund was a real eye-opener (cannot remember the exact post).

  2. Sir,
    While investing in a Mutual Fund, is there a need to get some kind of physical certificate like we get when we buy Bond Certificates? What can happen to our investment if the asset management company by chance gets closed. And is it safe to invest through online sites like fundsindia.com?

  3. @Paramdeep,
    While it is a good thing to have a physical paper, it is more like a statement rather than a certificate. Typically, these statements are sent for every transaction as well as one statement at the end of financial year per Fund house (giving a summary of all your holdings by scheme).
    However, the statement in no way is final proof of your current holdings, since you may have redeemed some units after the date of statement.
    If the AMC gets closed, typically the assets are transferred to a bigger/better player in the market. For example, Alliance got taken over by Birla Sun Life, Zurich sold the MF business to HDFC MF. It is unlikely that you will lose money due to that. However, to minimize such events, stick to large MF houses. For example I wouldn’t consider investing in Sahara MF schemes, even if some schemes give very high returns.
    Finally, investing through online sites like fundsindia.com will give you good speed of execution. Safety has to be built slowly on trust over time. I myself do online MF purchases thru ICICIDirect and am ok with the services (they don’t allow some schemes for God only knows what reason). One of my office colleagues invests thru fundsindia.com and hasn’t faced any major hassles so far. Keep in mind that such online transactions must necessarily reflect into a physical statement that you receive, just so that you are upto date that the transaction did indeed happen.
    Happy Investing!

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