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Durable Arrangement

A limited number of funds, plus a long-term horizon are ideal for an investor

I want to invest Rs 6,000 through a systematic investment plan (SIP). The portfolio that I have made includes Birla Sun Life Frontline Equity, DSPBR Top 100, HDFC Top 200 and Reliance Growth. I want to add another fund in my portfolio. Please suggest.

The four funds that you have already invested in are enough. In fact, ideally, you should have only three funds in your portfolio and invest a round number of Rs 2,000 in each and your portfolio will be very strong. But always keep in mind that you must invest consistently and that you will not be needing to withdraw this money before five years.

I am a student and I have heard that insurance companies are doing away with insurance agents. What are its effects or benefits?

The situation as of now is that there are 30 lakh insurance agents in the country. Almost the whole of the insurance industry’s group life products are sold through agents. As such, it does not look feasible that insurance business can be done without agents. But we live in a time of change. Though agents get money on the amount of work they do, but there may be a situation in which the insurance companies may come out with their own selling mechanism. Apart from that, the cost of selling insurance comes to around Rs 30-40 per cent.

Insurance is a need. Therefore, we are not asking whether the insurance industry can work without agents. Rather, we are discussing whether there will be more transparency in the functioning of this sector. 

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