The Wealth Manager’s Picks

Term Life
If you are a non-smoker go for the following:
Preferred Term Assurance of Kodak Life
Term Assurance Plan from HDFC

Unit-linked
These did have a significant advantage of Section 10 (10-D), under which if you invested 100 per cent of your contributions into equity you would not be liable to pay tax upon withdrawal. Now that investments in equities and equity mutual funds have zero long term capital gain tax liability, it has stolen from ULIP a significant advantage. Besides many ULIPs in the market tend to have rather high expense loadings, meaning your contribution to investment reduces substantially in the early years of your policy. If despite this you want to buy, then look at:
HDFC’s Unit Linked Insurance Plan
ICICI Prudential’s Lifetime Policy

B. The INVESTMENT STRATEGY
1. Fixed Interest Paper
Good for those who want to take no risk and prefer to have a pre-defined rate of return on their investment. However one needs to keep in mind some important aspects of this investment:
Most products will not be able to beat inflation and hence there will be erosion in the real value of your money
The returns will be taxable as we move towards the EET regime and the situation is adverse with the withdrawal of section 80L Liquidity is low Given the universe of such paper one may consider the following instruments;
Small Savings Schemes, with an approximately 9 per cent yield
Senior Citizen 9 per cent (taxable) bonds
8 per cent taxable RBI Bonds

2. Mutual Funds
This is an investment class that not only provides ample choice but also an important advantage of flexibility and liquidity.

Cash Funds
Provide a better option then FDs or other fixed interest instruments. Look at:
DSPML Liquidity Fund
Reliance Liquid Fund-Cash Plan
One can expect returns in the range of 4.5 to 5 per cent

Debt Funds
These are alternative to investments in fixed deposits and other low yielding interest rate products. Please note however that debt funds may or may not be a hedge to inflation. As interest rate rises, debt funds starts giving lower and negative returns. Look at:
Conservative Plan:
Birla Floating Rate Fund
Kotak Floater

Balanced Plan:
Reliance Income Fund
DSPML Bond
Aggressive Plan:
ING Vysya Select Debt Fund
Standard Chartered All Seasons Bond Fund

Equity Funds
If your objective is to create wealth in the long term there is no asset second to equity investments. One can control the level of risk one wishes to take by choosing products that have a controlled level of equity exposure. Look at:

Conservative Plan:
Franklin Templeton’s FT-MIP plan
SP Merrill Lynch Savings Plus – Aggressive plan

Balanced Plan:
Magnum Balanced Fund SBI Mutual Fund
HDFC Prudence fund from HDFC Mutual Fund
Aggressive Plan:
Magnum Contra from SBI
HDFC Equity Fund