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You should not depend on equity to meet your income needs.

I want to invest Rs 5,000 each in UTI Opportunity Fund and Top 100 Fund. How do I go about it?

UTI Opportunity has proved to be a very good fund. We hope that if the markets remain in their positive frame of mind, this fund will continue doing well.

However, these two funds are not good if one talks about the kind of income that you may be expecting.

UTI Top 100 will invest in big companies, so we expect that there are less chances of these companies making losses and one would get a predictable portfolio and even in bad times, the fund would do well.

UTI Opportunity has done well in the last 2-3 years. But again this is not the fund for you, if you are expecting income.

Remember, equity does not suffice for meeting your short-term spending needs. But, if you are investing on a long-term basis, then both these funds are good.

I want to invest in Sundaram Tax Saver Fund. Is it good? I have already invested in Tata Tax Advantage three years earlier. Should I redeem?

Whenever one is investing in a tax saving fund, one should look at a three-year and beyond time frame, though one cannot bring out money before three years because of the lock-in period. If you do not take out money from tax savings funds for some 10-15 years, it can add up to a fairly large amount.

If there is no immediate need, you should not redeem the amount. Generally, you should not take out money three-four years before the need for it arises. It is not a function of when to take out. Markets are cyclical as they would go down sometime and come up and over a period of time, they are at a higher level.

We have seen markets moving from 2,800 to 4,000, coming down to 3,500, then rising to 6,000. If you are young and have 10-15 years, then if you are investing Rs 1 lakh in equity funds, the result of forgetting it for the next 15 years, while you are taking the tax breaks, can translate into a substantial amount. By the way, Sundaram Tax Saving is a good fund.

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