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Good Tax Saving Funds

Value Research CEO Dhirendra Kumar addresses investors' queries every week on the Star News show Fund ka Funda. Here are some excerpts

Please advise good tax saver funds for higher returns for F.Y - 2008-09.
Ajay, Assam
Opt for some well rated tax savers which have performed well in the past years. Some good options can be Sundaram Tax Saver, Magnum Tax Gain or Birla Sun Life Tax Relief 96.

What are the tax implications on equity mutual funds. Is there any tax liability if I book losses?
Ashok Singhal
In case of equity mutual funds, you pay tax only on the gains. The current tax rate is 15 per cent on the amount of gain if the fund is sold within one year. Post one year of holding there is no tax liability. In case of a loss (irrespective of period of holding), you are not liable to any tax.

I am 26 years old and wish to start a SIP of Rs 1000. Please suggest some funds.
Choose from well rated equity diversified funds like Kotak 30, HDFC Top 200, Birla Frontline Equity or Sundaram Select Focus. These funds have a consistent track record and would help you achieve your goals.

I would like to invest Rs 24000 per year for 8-10 years. Please suggest two best equity diversified funds. Should I opt for sip or lumpsum?
Ravinder singh
Choose from well rated equity diversified funds like HDFC Top 200, Birla Frontline Equity, Sundaram Select Focus or Reliance Vision. It is always better to opt for SIP as it helps in averaging the cost. You can initiate an SIP of Rs 2000 per month to deploy your amount.

Which Tax Saver to invest in this year?
Suresh Kumar Saxena. Bhopal
Ideally you should initiate an SIP in any well rated tax saver and spread your investments over entire financial year. Choose from funds like Sundaram Tax Saver, Magnum Tax Gain, Birla Sun Life Tax Relief or HDFC Tax Saver.

When Sensex was at 20500 in January 2008, I invested Rs 3 lakh in mutual funds. Right now what can I do?
Anupam Kumar, Raipur C.G.
It is never advisable to invest a lump sum amount. Now that you have done it, you need to be patient and let the markets recover with time. Going ahead, always try top opt for a SIP or spread your investment over 6-12 months at least.

I have invested Rs 10,000 in Reliance Natural Resources Fund, Rs 15000 in HDFC Infrastructure Fund, Rs 10,000 in TATA Indo Global Infrastructure Fund. What is the future of my funds. I want to invest Rs 4000 every month. Which fund should I select?
Sneha Jaipur
All funds selected by you are new funds which have been recently launched. It is always better to invest in older funds with a proven track record. Now that you have invested, wait for some time before evaluating their performance. For the SIP, opt for a well rated equity fund like Kotak 30, Sundaram Select Focus or HDFC Top 200.

I invested in LIC Money+ policy. What is your opinion on this. Is it a good investment?
Diz Rahim
ULIPs do not make smart investments. They have high initial costs which eat up your return. Remain invested for three years and then consider surrendering the policy (if it acquires a decent surrender value).

Want To Invest Rs 1 lac In Reliance Power Diversified Fund, ICICI Infrastructure Fund. Your Opinion?
R.S.Agarwal Ghaziabad
Both funds have been performing well in the past, but both are unrated and sectoral funds which are riskier. Equity diversified funds would be a better option if you wish to diversify your investment well. These funds can be high risk high return options.

I wish to double my money in 3-4 years. Suggest some funds.
Though there is no fund with guaranteed returns, if you wish to be aggressive while investing opt for some well rated mid cap funds. Some good choices can be Reliance Growth, Sundaram Select Mid Cap or Birla Mid Cap. These funds have higher associated market risk when compared to a diversified fund.