The Times Of India - Kolkata, 11/13/2018 Cropped page Page: 17

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It's festive-intensive season of theyear. It's also the season of givingand receiving gifts. Since some of

the gifts that we receive have got avery short shelf life, there are obvi-ously questions in the minds of peo-ple if gifts that they give could bemade more long lasting.

One of the gifts that meetsthis criteria is gifting an SIP(systematic investment plan)in a good mutual fund. AnSIP could be continued foryears. Secondly, if the SIPis in a good mutual fundscheme, it would appre-ciate in value over thelong run.

Of late peoplehave started gift-ing SIPs to theirchildren, grandchildren andyounger rela-tives, mainlywith theobjective of

meeting the costs of higher educa-tion. Here the parents or grand par-ents set up an SIP in the name of thechild/grand child and every month afixed amount is invested in thechild's name. There are, however,

some new waysof gifting an

SIP whichare alsoemergingfast.

Accordingto Gajendra

Kothari, MD &CEO, Etica Wealth

Management, dur-ing this Diwali sea-son, well off peopleshould also thinkabout gifting an SIPto the children oftheir house helps,drivers and otherswho otherwisewon't

be able to meet costs of good educa-tion for their children.

"Donor SIPs have been allowed inthe (MF) industry," Kothari said,"especially in children's gift fundsand the similar ones." Under thisplan, one can open an SIP in thename of another person and keepcontributing for months or years.He/she could also set a date whenthe SIP should stop. After that themoney that had accrued in thefund, will go to the child'saccount.

"There is a lock-in provi-sion and the child will get themoney only when he/she turns18," Kothari said. This ensuresthat even if needed, the child'sparents cannot withdraw themoney for their other needs.Another way to do this is to putsome money in a liquid fundand every month a pre-fixed

amount will gointo the SIP.

Anotherway

through which a person can giftsomething to his/her parents, broth-ers, sisters and all blood-relatives issetting up an SWP (systematic with-drawal plan). Under this structure,the donor sets up a corpus and everymonth a pre-fixed amount is trans-ferred to the bank account of therecipient, Kothari said.

— This article has beenexclusively created for

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Himanshu Shekhar Choudhary replies

Your net saving is Rs61,000 per monthand your time hori-

zon is 10 years, afterwhich you plan to retire.According to me, you haveto invest through System-

atic Investment Plan (SIP)in the following manner tobuild large corpus:

` 25,000 per month inLarge Cap Equity Fund

15,000 per month in Multi Cap Equity Fund

10,000 per month inSmall Cap Fund, and

11,000 in Balance i.e. Hybrid fund.

You already have a corpusof Rs 26 lakh in PF and Rs12 lakh in PPF which yieldat of 8-9% annually. Thisway you may achieve acorpus of approximatelyRs 3 crore.

- The writer is a mutual fundadvisor from Kolkata

This article has been exclusivelycreated for UTI SWATANTRA

Invest through SIPs to build a large retirement corpus

I am a 40-year-old married man from Bangalore. I have a 12-year-olddaughter. My monthly salary is Rs 88,000, and my total monthly expense is Rs 45,000 (savings of Rs 43,000). I have two houses: One is on rent for Rs 18,000. I have a corpus of Rs 26 lakh in my PF and I deposit around Rs50,000 every month which includes my VPF. I also have Rs 12 lakh in my PPFaccount. I have Rs 1 crore term cover for 25 years and private insurance of Rs 10 lakh for my family. I want to retire in 10 years. How much do I need toinvest to achieve a retirement corpus of Rs 3 crore?

— Ranjan Pai

A corpusof Rs 26lakh in PFand Rs 12lakh inPPF willyield at of8-9 percentannually.This wayyou mayachieve acorpus ofRs 3 crore

NARESH PACHISIA

Generally, peopleacross all age-groups, have a natu-

ral tendency to meet theirpresent consumptionneeds on priority, viz.

Essentials like food,clothing, shelter, etc.

Family needs like educa-tion, health, essentialhousehold goods, etc.

Lifestyle needs like enter-tainment, dining, vaca-tions, etc.

Other than exceptions,young earners have rela-tively smaller incomes andyet have a tendency tospend more, accentuatedby peer pressure, resultingin negligible savings. By the time people havefamilies, income may have grown, but consump-tion needs grows too. Inthe process, savings andinvesting tend to take aback seat.

Lump sum investing isgenerally quite difficult aspeople are struggling withtheir current financial

needs. Fear of losing capi-tal in market volatility alsokeeps investors away, es-pecially the retired. Behav-iour tendencies like 'tim-ing' the market entry andexit may also keep peopleaway. Systematic Invest-ment Plans (SIPs) in mutu-al funds is panacea for allsuch issues, notably:

Making it easy for in-vestors to comfortably in-vest smaller sums at regu-lar frequency to achievetheir big financial goals.

Development of a disci-plined regular investing

habit and keeping awayfrom behavioural and psy-chological traps of 'timing'.

Although benefits ofSIPs for all other agegroups are obvious, it isuseful for the retired aswell. Investing retirementfunds or investment in-come through SIPs, miti-gate volatility risk to agreat extent.

— The writer is an Independent financial advisor

This article has been exclusivelycreated for UTI SWATANTRA

SIP MAKES IT EASY FOR INVESTORS TO INVESTSMALL SUMS TO ACHIEVE BIG FINANCIAL GOALSInvesting in equity mutual funds through SIP is recommended for youngsterswho can benefit from the power of compounding in the long run

Such a gift ensures that over time it grows in value and comes with a long shelf life

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Make sure that the recipienthas a bank account at the

time of starting the SIP and thesame is linked to this investment

In case the recipient is aminor, open an account with

his/her parent(s) named asguardian in the same account

Ensure that thedocumentation process is

complete and error-free so thatthe recipient does not face anydifficulty at the time ofredemption

Please remember once yougift an SIP, that money will

never come back to you even ifyou and the recipient part ways.In such cases, however, there's noproblem in stopping the SIP.

DOS AND DON'T'S OF GIFTING AN SIP

Swatantra Kumar explains:Side pocketing is a type ofaccounting practice that fundmanagers resort to in case ofspecial situations where one ormore of the fund’s holding turnsilliquid. In such a situation, theilliquid assets are taken out andput in a separate (smaller size)

fund with all the investors of theundivided fund getting units ofthe new fund on a pro-ratabasis. Sebi is currentlydiscussing allowing Indiamutual funds to allow side-pocketing, mainly after defaultson some of the bonds bytroubled financier IL&FS.

DEMYSTIFIER

WHAT’S SIDE-POCKETING INFUND MANAGEMENT?

THE TIMES OF INDIA, KOLKATA TUESDAY, NOVEMBER 13, 2018 17

CCI NG 3.7 Product: TOIKolkataBS PubDate: 13-11-2018 Zone: KolkataCity Edition: 1 Page: TOIKCFTR User: sankar.debnath Time: 11-12-2018 21:08 Color: CMYK

UTI Mutual Fund

#q, e 4c b"4-ar zinaay i AA.

V111 0M Ri0joi spipp-

UTI Mutual Fund

aq, e.k be kfar zindagi k4.

GIFT AN SIPTHAT CANBRING MANYMORE GIFTS .

WWI

UZI-

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