Tax Saving ELSS Mutual Fund SIP Query

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Supra said:
As of now I am sure about Canara Robeco Tax Saver-D(35%) & HDFC Tax Saver-D(40%). The last fund I am willing to risk a bit and can go for growth option. So I am looking for Taurus Tax Shield/Religare Tax Plan (25% in either) as their portfolio seems quite balanced.

Considering these 3 I guess the protfolio becomes more or less balanced in various sector and between large & mid-cap.
Also one thing camde up in my mind...is it preferable to go for funds with lower NAVs and thus securing more units rather than go for say like HDFC where the NAV is quite high and you get quite less units. This is a concern since I am going for Dividend. So shouldn't be HDFC in Growth mode ?
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Let the expert answer this for you. Is Low NAV Cheap? - Value Research: The Complete Guide to Mutual Funds

Supra said:
Also this is really tedious these days to go in offline mode as KYC forms need to be submitted and verified for every application. That is on top of the MF application. Also to transact online on fund houses's website also a PIN is required again for which application form + PIN form + KYC form needs to be submitted !
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Isnt KYC and PIN one time affair, and any investments below 50k in a fund doesnt require KYC verification.

If you have a PPF account do not neglect it, allocate a share from your 1lakh limit. It still stands as a fantastic tax saving and investing tool. Anyways there is a minimum amount which is to be deposited every year in a PPF account.
 
A word of caution against Dividend Reinvestment.
Since you are investing in ELSS which have a lock-in period, if you opt for dividend reinvestment option, when dividend is declared it will be reinvested and you will get some more "units" in your account. The catch here is the investment date for the dividend is the same as the declaration date, and hence it will be locked-in for 3 years beyond that date.

If you compare this with the growth option, you donot get dividend or the reinvested extra units, but the actual value per unit for growth option is always higher than a similar dividend based plan.

I personally prefer the dividend option so that I can choose myself between the current plan and other options for reinvestment. The Dividend option might not work in your best interest if you are not actively tracking your investment. Keeping the dividend stagnant in your savings account is a total waste. For those who are unable to track investments and are more into "invest and forget" mode the Growth option is the best.

All of the above is only valid for ELSS based plans as they have a lock-in period. Also, I am not considering any extra charges incurred for the re-investment as against the growth option.

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medpal said:
I used to go for Dividend reinvestment but some IT officials consider Reinvested dividend as new investment and lock it. (Now this is cleared up by GOI that it should not be an investment).
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if this is true then there should be no difference between Growth/Div-Reinvestment. Still the Growth option would be the best as it would be difficult to track the amount of units received as dividend over a period of time for a specific investment date. In growth plan it is as simple as "I invest "X" amount and get "Y" units..... after lock-in ends, I sell "Y" units and get "Z" amount.
 
@ setuniket...thanks for the links.

Since I will be investing in dividend mode, this is what I was wary of :

The only instance where a higher NAV may adversely affect you is where a dividend has to be received. This happens because a scheme with a higher NAV will result in a fewer number of units and as dividends are paid out on face value, higher NAV will result in lower absolute dividends due to the smaller number of units.
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As of KYC verification.....the investment will invariable cross 50k in a year and I would need to get KYC done sooner or later.
 
Canara Robeco : 50%

HDFC Tax Saver : 30 %

SBI Magnum Taxgain : 20%

I am investing in HDFC and SBI since 2005 and have got decent returns.

Keep reviewing ur investments every 6 months.

Dividend Payout is a better option. You book some profits. From my personal exp whatever dividend we get remains idle in our bank account. If you can yourself reinvest the dividend amount then Div payout is a good option. it also lets u put the money from under performing funds to a new fund.

U can do a SIP in Canara Robeco.

For HDFC and SBI u can get an ipin and invest online. this will give u more control over ur investment dates. For example markets are falling a lot in the last few days. now if ur SIP date is on 25 of the month , by that time markets would have come up. if u had an online pin now u could have invested online and got the benefit of lower NAV.
 
Supra said:
^^ Wow just awesome suggestions.

As of PPF...I already have around 10% exposure already in PPF/VPF and 10-15% in LIC HIP/ULIP. For the rest I was looking for ELSS schemes for myself as well as my wife.

I will try and contact Prudent and some fund houses ( Canara Robeco & HDFC Tax Saver) and see how it can be done. If it involves too much paper work individually, I will rather go the FundsIndia way. I want a system where I submit one application form and one KYC form and want to use it for all investments in future. Also is there any option other than ECS for SIP ELSS ? I want something like an Alert SIP wherein I can xfer the funds 1-2 days before the due date via netbanking through an online interface.

Also can you plz give me the weblinks for Prident & NJ ?
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Supra its called folio mapping. Once you have a folio no generated with a fund house, going fwd you need not fill up complete details for another investments witht he same fundhouse. Simply d same folio no will capture all you investments. HDFC, icici, citi, all have an online investment portal.
I would call myself a high end investor for the sheer diversification that i have and in my honest experience ICICIdirect stands out over everyone else.
Mf entry load is anyways not there anymore and less than 50k doesn't need kyc i believe. But to open one of these online accounts, u will have to do a kyc.
Unless and untill you are good at managing paper work, dont go the karvy or any other direct route. Also it is always convenient to have all your investments under one roof which is what these online sites provide.

A foot note// I feel some of ur mf picks are wrong.. 2wice above i have mentioned d same. since elss have a lock in, avoid volatile investments.
 
^^ Thanks for your valuable suggestions. Can you please let me know what ELSS funds you suggest. I would like to diversify and go for 2 stable funds ( with low risk and at least modest 12-15% returns pa ) and last one with a bit more risk ( expecting 20-25% returns).

I considered HDFC Tax Saver to be quite stable and balanced performing whereas Canara Robeco is the one which is the bit risky one. As of another stable/balanced fund I think then I can go for the Birla Sun Life / ICICI Prudential Tax Gain.

Please let me know what you think.

Unless and untill you are good at managing paper work, dont go the karvy or any other direct route. Also it is always convenient to have all your investments under one roof which is what these online sites provide.
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Thats why I plan to go with FundsIndia as I can manage everything in one roof and its completely free for MFs. On the other hand ICICI direct is charging usual yearly fee( Rs 500 or so from 2nd year...1st yr free) + flat fee for mutual funds (some 100-150 bucks).

Also I dont understand RKitect's opinion...in an ELSS SIP the payment will go on the predefined date which is decide at the time of starting the ELSS SIP. Or Can I pay it before the date of the montly SIP when the market is down ? Please clarify is anbody is sure about it.
 
Website of NJ INDIA INvest :
NJ Fundz Network-India's leading corporate advisors network offers Mutual Funds,Insurance,Fixed Deposits,PMS,Realty

website of Prudent Advisory :
http://www.prudentcorporate.com/ last few weeks this website is not working properly you wil have to try out.

Now few more suggestions:

If you are planning only 2 funds go for
HDFC TAX SAVER (50%)
either BIRLA SUNLIFE / ICICI PRUDENTIAL : (50%)

Options for SIP :
There is autodebit fro SIP which is always more convenient, so that you dont have to remember everything.

Second option is STP :
You put lumpsum amount in one of the liquid / income / debt scheme and then on a stipulated date transfer the predecided amount to equity scheme. (this requires outgo of funds at one go, gives better than savings account returns)

Third Options is for HDFC only :
Triggered STP / Flexi STP :

Here on a predecided triggers you can transfer more amount in equity.
Like if index falls more you invest more, if index rises more you invest less. But this does not work in case of ELSS well as sometimes trigger dont click at all in stipulated period and you end up not investing systematically.
Regarding KYC / Forms :
You have to repeat the procedure with every fund house.
You have to repeat the procedure with every new portfolio of same fund house.
You have to submit pancard copy with every new purchase / stp / sip registration.

But once you are registered with fundhouse website, you dont need to do anything for that particular folio no. every thing is automatic.

This is where intermediaries like NJ / Prudent / Karvy come in. they once take documents from you and then attach everything as and when needed.

I would say if any one of your knowns is working as agent thats your best bet because now a days there are chances likely that your documents can be used to procure a hidden identity.
 
Also I dont understand RKitect's opinion...in an ELSS SIP the payment will go on the predefined date which is decide at the time of starting the ELSS SIP. Or Can I pay it before the date of the montly SIP when the market is down ? Please clarify is anbody is sure about it.
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If u have registered for a sip ur money will be invested on predefined dates. (say 25 of the month)

But if u have an online pin for (HDFC/SBI ) u can invest on any day of the month before 3.00 pm as per your convenience and get the NAV of the same date. This offers more flexibility.
 
Thanks Doc for the suggestions. Prudent site is not opening.....as of NJ Invest there seems to be some charges

:: Njfundz Network - Sharing Success ::

As of now FundsIndia based out of Chennai looks good and has got good reviews and is completely free, so I am registering with them.

@RKitect --- So basically the the facility of Flexi SIP is only for HDFC and SBI. I will talk to FundsIndia and see if I can do that via their Alert SIP program wherein payment can be done by a gateway on any day before the monthly due date. Also plz suggest ur ELSS MF funds that you recommend for stable returns @ 12-15% pa
 
Ok supra first things first... What do u understand when someone says aggressive or conservative??? There r always 2 things in any investment product, investment strategy and 2nd is the investment portfolio.

The portfolio determines the risk return rewards whilst the strategy determines the style of investing (aggressive and conservative).. wont get into details of that but purely in terms of less risk with adequate returns i suggest--

HDFC tax saver and birla 96 for conservative

Reliance and icici for a bit aggressive.

Do understand that the above recommendation is as per strategy and not portfolio.

If u wanna go as per fortfolio then i guess im not the man to ask when it comes to close ended funds, open ended i can clearly help you out...

Now as per your own investment strategy.. i spoke about folio mapping earlier..

This is how it works.. for eg if you purchase X unites from Y fund house in the month of may. In june you see another investment opportunity.. Now Y fund house has created a folio no for you already cause of the X investment you made. Say the folio no is 1234. Now when u fill a form, u need not fill all the details again in june. All you have to do is mention d folio no i.e 1234 on the form. now assume in may you invested in icici tax saver but in june u feel like investing into some other icici fund cause u have surpluses. Even then u can simply use the same folio no. Hence all investments done under icici are under folio 1234..

Now coming to sips. in sips you cannot change the date of allocation of funds. the usual dates r 4th, 10, 14th and 20th. Once you choose a particular date, every month the money will go in at the same date, you cannot make changes here..

But if u wanna time the market and say invest 1.2 lacs, in that case dont start a sip and simply use the same folio no every-time... i hope my above explanation clears things for you..
 
^^ Thanks for ur suggestions :)

As of now I wanna go for SIP only with tax benefit being the most important factor. Also no lump sump invest ment is possible and I want a monthly SIP ELSS fund only. So may be for now I will go with HDFC Tax Saver-D + Canara Robecon Tax-D as for a horizon of 3-4 years I expect only arnd avg 15% annualized return combining both the funds. May be after a month or two depending on market I will choose an agressive fund ( Reliance/Religare/Taurus) purely for investing.

Also I invest directly into shares via my Indiabulls account so this present ELSS is just for tax saving. So this is mainly for mantaining monthly savings and getting decent returns ( anothing above 10% is welcome)
 
@RKitect --- So basically the the facility of Flexi SIP is only for HDFC and SBI. I will talk to FundsIndia and see if I can do that via their Alert SIP program wherein payment can be done by a gateway on any day before the monthly due date. Also plz suggest ur ELSS MF funds that you recommend for stable returns @ 12-15% pa
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yeah in the funds shortlisted here only sbi, hdfc allow investments via netbanking. Canara robeco does not. Sundaram tax saver is also a good fund. They also have online facility.
I am investing in the following funds :
Canara robeco
HDFC Tax Saver

you can also compare the funds on Valueresearchonline.com. compare the performance of funds for the period of 3-5 years.
The money you invest will be locked in for 3 years.(which i be a blessing in disguise) Dont make your decisions based on the short term performance.
 
@supra : The link of NJ you said is not the thing we are talking about. That is kind of PMS which manages your money on your behalf and they share profit they make.

the MF agency is different, they dont charge anything except what fundhouse charges to us. Now a days the entry load is zero so we are not charged anything.

Fundhouse pay brokerage to the agencies.

I am a customer of NJ and i am not charged anything.

here are few addressed of NJ offices.
CHENNAI - MAIN
Office No. 1C, 1st Floor, Laxmi Bhavan,
609, Mount Road, Nugambakkam, Chennai-600006
Phone:044-32566180

BANGALORE - MAIN
S-318, Manipal Center, S-Block,
47, Dickenson Road, Bangalore-560042
Phone:080-32942425

BANGALORE - JAYNAGAR
#5, Gajendra Towers, 2nd Floor, 11th Main,
4th Block, Jayanagar, Bangalore-560011
Phone:080-32450027

BANGALORE - MALLESHWARAM
# 70, 2nd Floor, Karthik Complex,
Above ICICI ATM, 17th Cross, Margosa Road, Bangalore-560055
Phone:080 32431448

HYDERABAD - MAIN
307 W, 3rd Floor, Navketan 62,
Sarojini Devi Rd., Opp.Clock Tower, Secunderabad-500003
Phone:040-32400078
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here is link where you get contact address and no. of respective place : :: Njfundz Network - Sharing Success ::
 
ok so finally I got my account activated in FundsIndia...took merely 3 working days to complete the KYC and account opening.

Now I need to start the ELSS SIPs :P

As of now here is what I am planning :

1. Canara Robeco Tax Saver- D ( 3k per mnth) --- mid cap fund...so better to book some profits once in a while :P
2. HDFC Tax Saver - G ( 4k per mnth)

Now the 3rd fund is where I am a bit concerned

I have options of

1. Birla Sun Life Tax Saver -96
2. Fidelity Tax Advantage
3. Religare Tax Saver.

I am leaning more towards Fidelity as its quite a balanced portfolio and has a good track record over last 4.5 yrs ! Religare comes next but the portfolio seems very conservative...finally Birla Sun life....well they just seem to be more interested in giving more dividends and attracting new investors :P

Also one thought came up my mind.....should I buy some fund (considering perf is ok) which is giving dividend soon enough...so that I get some amount back and the NAV lowers out right from my 2nd SIP and I get more units at the start of SIP ! Anyone having knowldge of some decent funds coming out with some dividends plz post
 
Dividend is secondary, see and compare the performance especially during bad times, which tells you the real story about the way the fund is managed. Dividend is not bad, but shouldn't be the primary criterion for MF investment. Anyways from now declaring dividend isnt the same anymore, there is a SEBI circular in this regard which has changed the rules regarding dividend payout, so expect lesser dividend declerations from now. I think I have posted the link regarding this some posts earlier, or maybe look for it in Valueresearch.
 
ok so finally started the investment:

1. Canara Robeco tax Saver -D : 2000/- per mnth

2. HDFC Tax Saver -D : 3000/- per mnth

Got the folio nos in just 1 day and its reflecting in CAMS online also w/o any issues :)

Now in FundsIndia I have set an Alert SIP and I can pay in on or before 25th , the monthly SIP towards these funds and I will be allocated the units accordingly on the same day. Now my thinking is that the lock in is for 3 years from the allocation date....so basically each months SIP will be locked in for 3 years. So while taking out the money I guess I have to wait for a total of 3 more yrs from the end of the 3 yrs SIP as the last SIP at the end of 3 yrs have to wait 3 yrs more. Isn't it that way and I guess the units can be redeemed only after the 1st SIP (or thereafter) has completed 3 yrs lock in.

How are these MIPs....any one has any idea on them ?
 
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