Withdrawals from ELSS before 3 yrs

I had invested in ELSS (equity linked savings scheme) funds one year before, but I have not claimed this investment while filing for return. Can I withdraw from the ELSS, though the three-year lock-in is not complete?

-Vispy Contractor

ELSS are tax-saving funds, with a lock-in period of three years that allow investors tax deduction of investment up to Rs 1 lakh. One should plan out these investments, rather than investing at a whim. You can withdraw your investment if you are able to secure a certificate from the income tax department that you haven’t made a claim against this investment.

We are a working couple with a three-year old daughter. Both of us are 32 years old and want to cover ourselves for Rs 25 lakh each. Should we buy Aviva Ulip? For each one of us the annual premium is Rs 50,000 for 30 years with death benefit of Rs 25 lakh; or should we buy a term policy for Rs 25 lakh each and invest the rest in PPF and mutual funds (currently we invest Rs 1.2 lakh per annum in MFs).

-Aparna

Insurance and investments do not mix well. Moreover, with high initial and recurring costs, Ulips fail to serve the investment need of the individual. So, in our view, you should consider the second option of buying a term policy and invest the rest via an SIP in mutual funds.

I would like to invest in a mutual fund for the short term (less than one year). If I want around Rs 3 lakh at the end of one year after investing, then per month how much should I invest and in which funds?

-Amit

Considering a rate return of 6.29 per cent (category average of liquid plus funds for the past five years), you need to invest Rs 24,160 monthly to accumulate Rs 3 lakh at the end of one year. Some short-term funds you can look at are JM Money Manager Super and Fortis Money Plus Reg.

I want to invest Rs 10,000 in a mutual fund as a single investment. I have a target of two years years for my child's school admission and his mundan ceremony; he is presently 18 months. I would need Rs 40,000-45,000 at that time. Suggest some funds. I also want to start an SIP of Rs 1,000 a month for the next 25-30 years.

-Prashant Misra

You want Rs 10,000 investment to turn into Rs 40,000 in two years. That's a return of 100 percent per year. Optimism apart, this is just too tall a task for fund manager to deliver with certainty. Since you want to invest for such a short time, try doing so in a debt fund like Fortis Flexi Debt or Canara Robeco Income.

For SIP, you can look at balanced funds like FT India Balanced or DSPBR Balanced.

I want to build a strong and healthy mutual fund portfolio with a time horizon of 7-10 years. I have selected few funds like HDFC Top 200, Reliance Growth Fund, Kotak Opportunity Fund, an MIP and a pharma sector fund. Is it wise to go with these or should I reassess my choices? Also suggest a good MIP fund and pharma fund.

-Anurag

The funds in your portfolio are 4/5-star rated with good track records. For monthly income funds, you may invest in Birla Sun Life Monthly Income or DSB Chola MIP. Sectoral funds should be avoided for the reason that they have a narrow investment objective and thus are riskier than equity diversified funds.

Value Research