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Saving on Taxsavers

It is crucial to know when an investment is adequate. Adding to it is not worthwhile

I have invested in these funds: SBI Magnum Tax Gain, Sundaram BNP Paribas Tax Saver and Canara Robeco Equity Tax Saver. How good are these funds? I want to invest Rs 20,000 in two months as an one-time investment in a tax saving plan. Which should I go for?

All of your investments are very good options. Even if you want to choose other funds to  invest in or add to your portfolio, these three funds must  be included in that. I would suggest that instead of expanding your investment, you should invest in these three funds only.

Investments in these three tax savers  might be too much and the goal could have been achieved with two such funds also ,but all the these three funds are good funds. If one had to choose one fund from this, it would have been a difficult choice.

I have invested in a ULIP from  UTI. Should I remain invested?

UTI’s ULIP is in some way a mutual fund and is the least expensive ULIP. You should look at it as when you are buying in UTI’s ULIP, then you are investing in a balanced fund in which you are getting a sort of insurance coverage. It is an option which however, would not give a very big return though it would give you returns with stability. You do not get a big amount as insurance in UTI ULIP though. You get only a meager amount, but if that satisfies your needs then from an investment point of view, UTI ULIP is a balanced fund and is a good option.

But remember, insurance and investment are totally bifurcated. If you are looking at this as an investment, then you get insurance free and if you are getting something for free, I do not think it is a problem. The real problem is if you are looking at ULIPs offered by insurance companies as an investment option.

Compared to these ULIPs, UTI ULIP is just like a mutual fund and you can discontinue investing, pull out money when you want to.  On this ULIP, mutual fund regulations apply. In fact, is has become cheaper in the new regime.

However, the economics of the product have become so unfavourable that I really wonder if UTI would be interested to sell this ULIP any more.



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