I have initiated SIPs of Rs 1,000/month since November 2008. Should I stay invested?
— S Ravindran
You have a good portfolio which is large-cap tilted and well diversified across sectors, the top three being Financial Services (22%), Energy (17%) and Technology (10%).
Why do you want to sell your funds? You have been invested for just two years. When investing in equity, you must take a time frame of around 3-5 years. If you need the money, you can sell. If not, then where do you want to invest the gains?
What has been the logic behind investing in three tax saving funds? If you wanted to invest Rs 3,000 in Equity Linked Savings Schemes (ELSS), you could have selected two funds with a Systematic Investment Plan (SIP) of Rs 1,500 in each.
You can discontinue the SIP in Principal Tax Savings if you want to and increase the SIP in the other two funds. Principal Tax Savings had a great run in 2006 and 2007, after which it has found itself at the bottom of category.
Even if you discontinue your SIP in Principal Tax Savings, you will not be able to sell the units since such funds have a 3-year lock-in period. So from every SIP date, you will have to calculate 36 months before which you cannot sell.
This article was originally published on December 22, 2010.
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