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Investing through SIP

Have a brief question related to funds? We have a quick answer. Here are questions posed by investors across the country and the answers given by Dhirendra Kumar.

Dhirendra Kumar gives quick answers to some queries posed to him on a television show.
Name of programme: Fund ka Funda
Time of programme: 1.30 pm/Sunday
Channel: Star News


Q. I am interested in investing in SBI Infrastructure Fund (SIP mode). Can you guide me its future prospects?
- Sunil Guha, Ujjain, MP
A. SBI Infrastructure Fund is a relatively new closed-end fund launched in June 2007. Infrastructure sector holds promise, but the fund is just getting started and bit too early to evaluate this fund. It will be converted into an open-end fund after June 2010.

Q. I want to invest 80,000 for four years. Please advice me some equity or balanced fund?
- Narendra Kumar, Jehanabad, Bihar
A. Here are four top rated balanced funds -- HDFC Prudence, Magnum Balanced, Birla Sun Life'95 & DSPML. Spread you money in atleast two funds and stagger it over next four months.

Q. I would like to invest Rs 3 lac in Monthly Income Plan to get monthly interest from mutual fund. Suggest some good option.
- Abhyankar, Pune
A. As far as monthly income is concerned you can invest in DSPML Savings Plus Aggressive, HDFC MIP Long-term and ICICI Prudential Income Multiplier-Reg

Q. I have invested in two SIP -- Reliance Diversified Power Sector Fund and Franklin Flexi Cap. Are these funds fine?
- C P Pathak, Jabalpur, M P
A. Reliance Diversified Power Sector fund is a sector fund investing in power sector whereas Franklin Flexi Cap is a diversified equity fund. Both funds are not very old but doing very well. Continue your SIP's.

Q. Is investing through SIP option in following funds a good decision?
a) SBI Contra b)ICICI Infrastructure (c) Reliance Vision (d) Reliance Diversified Power A. Choose the diversified equity fund with decent performance history SBI Contra and Reliance Vision qualify as this.

Q. What is the tax implication of Growth & Dividend Reinvestment option in any Mutual Fund after 15 years?
- Rajesh Chouhan, ITI. Pratap Nagar, UDA
A. No implication for you as all gains from equity funds are fully exempt after one year holding period.

Q. What is the concept of Index fund? Which are good index fund schemes in the market?
- Dhiraj Gupta
A. An index fund's portfolio is a replica of an Index as it holds shares in the same ratio as the Index. The performance of the fund closely matches Index less the expenses. Index choices include Sensex, Nifty and Nifty Junior.

Q. Why do you always insist on exit from Reliance Equity Fund? Which are the best five equity diversified funds in which I can invest?
A. Its expensive. Choose from the range of 5- & 4-star rated fund.

Q. Is there growth option available with Magnum Taxgain?
A. Since May 2007 Magnum Taxgain has started offering growth plan.

Q. I want to put my money in Bharti Axa. Is my decision correct?
- Anand, Orissa
A. Make an informed choice. Bharti Axa offers ULIP which is investment flavoured with insurance.

Q. I want to invest Rs. 5,00,000 for over 10 years. Which fund should I go for good returns?
- Amit, Pune

A. Choose two or three diversified equity fund from the range of 5- & 4-star rated equity fund. Don't invest lump sum. Invest your money over the next 6-12 month.