Is SIP The Best Option?

I am 23-year-old and I have a job with a sala?y of Rs 22,000 p.m. My current portfolio is given below. Please help me in building a portfolio for my child and myself
Jam contributing Rc 7,300 p.m in PE
I have SBI ULIP Plan of Rs 25,000 p.a. for 3 years
• Ihave LIC plan of Rc 51,000 pa. for 15 years My SIP investments are as follows..
• SIP of Rc 1,000 p.m in Reliance Regular Saving - Growth - started in October, 2009
• SIP of Rs 1,000 p.m in HDFC Top 200- started in October, 2009 Now I can invest about 3, 000 p. m. more. Please tell me finvesting through SIP is the best option for me? Ifyes, then please recommend the SIP scheme in which I should invest.

Sunil, recently as I was traveling back from :LI’1r Hyderabad, a youngster working in an American tech company engaged me in conversation. As he came to know my profession, he started questioning me on which were the best investments.

It is difficult to hold back when I am confronted with such a sweeping question! By the time I was through, he declared that I had mostly likely changed his way of thinking and spending. What were these simple truths that I had disclosed to him?

Savings without direction is like a ship without a sail, (to use a cliché). You need to have a target; the target must have a time scale, a clearly identified need and must be quantified.

I sense a desire to provide for your child — but for what use, when and how much? These questions have not been asked by you. Unless these are clear, a plan cannot be repared. For instance, there could be a desire to provide for your child’s professional education. This becomes your direction. It would be required when your child reaches the age of 17 years — this becomes your time scale. In this instance, assuming tuition fees for a professional education as Rs 10 lakh, the same could cost around Rs 32 lakh after 15 years due to inflation. And this future cost becomes the quantification. Now we are in a position to make a plan to save towards it. Assuming that a balanced portfolio can provide compounded returns of around 12 per cent p. a., one must save Rs 6,900 p.m. through an SIP If one desires to be more aggressive since time is at one’s disposal and go for a 80 per cent equity and 20 per cent debt portfolio then your assumed return can be higher at 13.4 per cent p.a. — in which case your SIP can be bought down to Rs 5,500 p.m.

Another simple tip that I had discussed with my fellow traveller was regarding insurance. Though he had sufficient health insurance for his entire family, he was ignorant of the type of insurance ideal for his life cover. Insurance must be talked about in terms of ‘how much cover’ and not just ‘how much premium’. Premium follows the cover; meaning the first determination should be ‘how much cover’ do I need? The answer is that you need as much as your family would require to survive without you as a bread earner. A simple rule is ten times your annual income and costs of fulfilling any goals you have for your family members, less your accumulated savings. Please add liabilities, if any.

You can continue your SIP in equity funds. But for the debt portion, you may choose Birla Sun Life Dynamic Bond Fund.