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An Investing Habit

Investment plan continuity is necessary to get the profit experience

I have been investing in Reliance Regular Savings Equity Plus for the last three years. Should I remain invested? Also, should I start an SIP with HDFC Top 200?

Reliance Regular Savings Fund is a good fund and you may have got an experience of the profits in these three years. You also have experienced the necessity of investing regularly despite the downfall. You should continue with this plan. And for regular investment, HDFC Top 200 is also a good option.

I am a blind person and insurance companies gave me limited policies. While investment and insurance should never be mixed, but the problem faced is that I have to cough up extra premium. I have invested in an ULIP from HDFC some two years ago and pay Rs 2,500 in instalments. They give 24 options in a year for a switch-over, which I do not have a good understanding of. I have never taken advantage of it. I am interested in both investment and insurance as I am a government employee and want to avail tax-saving and insurance benefits.

If one talks about the switch over option, you can select how much of your money should be invested in equity and how much in fixed income, be it corporate debt or government securities, the former is a relatively stable asset class. The thought behind it is that if one has a longer period available for investing purposes, most of the allocations should be in equities. And as you come nearer to your goal, allocations in equities should become lesser.

If insurance companies are giving options of switch-over 24 times, then it is a benefit, but one should not make too many adjustments. Putting more effort into investing would not help give more returns on investment. One can exercise allocation review in one or maybe one-and-a-half years. If your investment horizon is still 10-15 years away, then more and more equity allocation should be made. If you are 7-8 years away from realizing your money, then equity allocation should be lesser. When it is just 3-4 years away, then your fixed income allocation should be increased, equity allocation decreased. And within a year or two, if you renew your allocation and select a plan, then everything should be fine.

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