Raj Khosla Founder and Managing Director, MyMoneyMantra.com, replies: Markets cannot be timed and thus you should rebalance your portfolio today rather than wait for a future correction. The choice of funds for market linked investments should always be based on time horizon and risk appetite. If your goals are 7-10 years away, you should immediately shift to the desired equity schemes. New contributions should also be aligned according to your goals. Equity exposure will help you yield better returns and build a desired corpus in the long run.
My father-in-law has 537 physical shares of Marsons Ltd with a face value of Rs 10. Recently he went to a broker to dematerialise his shares and was told that the current FV of the share is Rs 1 and he should first get a certificate from the company mentioning the actual number of shares he owns. Thereafter it can be materialised. How should he proceed in this matter?
Vikash Jain Co-founder, Share Samadhan Pvt Ltd, replies: Marsons Ltd shares are currently quoting at a face value of Rs 1. Thus shares of FV Rs 10 are no more valid. You need to obtain shares of FV Rs 1 from the company. For this the shareholder will have to write to the company. If the company is in possession of shares of FV Rs 1, they will send the same share certificate, else company would ask the shareholder to comply with formality for duplicate issue of shares of FV Rs 1.
I am 33 and have no children. I lost my husband in an accident recently. I received financial benefits to the tune of Rs 2.5 crore on his death. I earn Rs 15 lakh per year. I don’t want to remarry. I have a new flat fully paid for but don’t have any pension scheme. How shall I invest the lumpsum amount excluding my salary, in order to receive Rs 1 lakh or more per month at current prices after 25 years? I want safety of capital too.
Sanjiv Bajaj, Joint Chaiman & MD, Bajaj Capital, replies: Forecasting monthly cash flow will be difficult unless we assume certain variables which can potentially impact the overall future cash flow. Considering your requirement if we assume 6% annual inflation rate and 6% CAGR over the next 25 years on your lumpsum investment of Rs 2.5 crore, it will accumulate a corpus of approximately Rs 11 crore. Hypothetically if we assume that the future YTM of debt funds will be at the same levels as today, opting 20 basis points lower than the YTM as the SWP (Systematic Withdrawal Plan) rate will result in Rs 4.30 lakh monthly cash flow which will be equivalent to Rs 1 lakh in today’s term. You may consider good quality debt mutual funds, hybrid funds and corporate FDs.
The entire lumpsum amount can be divided in 25:50:25 ratio, respectively. ICICI Prudential Corporate Bond Fund, Nippon India Floating Rate Fund, HDFC Medium Term Debt Fund, IDFC Bond Fund Short Term Plan in debt category while ICICI Prudential Asset Allocator FoF, Kotak Balanced Advantage Fund, Aditya Birla Sun Life Balanced Advantage Fund and DSP Dynamic Asset Allocation Fund in hybrid category can be considered. Dynamic asset allocation or balanced advantage funds in hybrid category strike a balance between risk and returns with lower drawdown than pure equity funds and higher return than pure debt funds. A good portion of the portfolio can be given to this category for investors with moderate risk appetite and long-term investment horizon. The overall strategy will not only help in accumulating desired corpus which will eventually help in generating monthly cash flow but also give downside protection. It is also advisable to keep reviewing your portfolio at least once in a year.
