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How to Manage your Mutual Funds and Insurance

We completely understand that it is a herculean task for an average Indian to manage their investment portfolio with undivided attention. To help you with the same, we have created a list of steps to help you manage your mutual funds as well as insurance plans. In this way, you will be able to invest as well as have a life cover for yourself.

Let’s first begin with understanding mutual funds.

Check out your fund’s performance

Once you have selected a mix bag of mutual funds based on your appetite for risk, you can start by learning the basics of a mutual fund such as net asset value, annual performance, fund manager etc. Curate a list of your funds on the basis of the table below.

BenchmarkS & P BSE 200 TRI
Returns % 1yr0.25
Returns % 3yrs13.78
Returns % 5yrs20.64
Fund ManagerAjay Garg
Asset Size (Crores)₹16646

This is indicative for Aditya Birla Sun Life Tax Relief 96, you do not need to create a specific table manually as most of these come ready-made online. The returns is the most important factor to check the fund’s performance. If you compare a list of different types of mutual funds, you will have an understanding about which fund has performed the best over a time duration of 1|3|5 years.

Expense ratio

Every mutual fund comes with an expense ratio, an expense ratio is equivalent to the fee which the fund house/bank or asset management company charges you for managing the fund on your behalf. Since it includes all sorts of fund management charges, it affects the amount of money you will take home once you decide to liquidate the fund. For example, the expense ratio of Axis Long Term Mutual Fund is 1.24% as on 30th Sep 2018. This is charged on your entire investment portfolio. If your total investment is ₹1000, then 1.24% of ₹1000, which comes up to ₹12.4.

Check if your mutual funds are taxed

All mutual funds attract a tax of either small term gains tax or long term gains tax. The STGT is applicable if you decide to remove your investments within 15 months and it stands at 15% of your entire investment. LTGT stands at 10% of your investment portfolio and is applicable post the minimum lock-in period of any fund. The lock-in period is the minimum required time which has to be served by any mutual fund to remain invested. Long term funds have a minimum lock-in period of 5 years while an ELSS has a minimum lock-in period of only 3 years.

Know your risk tolerance

Every mutual fund carries some amount of risk as they invest in the stock market and the returns are market related. You can begin by stating your risk appetite. If you want to generate long term capital then you should invest in equity schemes as the returns are higher as well as the risk. If you seek moderate risk, you can invest in a debt fund. You risk factor will determine which investment portfolio suits your profile. So go ahead and evaluate your purpose of investment. Also, all mutual funds come with a risk-o-meter which ranges from low, moderately low, moderate, moderately high and high. If you are an aggressive investor, you can look in to mutual funds which come under the high risk category.

Invest in Large Cap/Diversified Schemes

Once you have come to a point of selection, you must have noticed that mutual funds invest in small|mid-cap|diversified capital market. A large-cap scheme invests primarily in capital share markets of very large established corporates or blue chip companies. These companies offer stability of investment and further diversifies risks arising out of a fluctuating market. Also, such companies offer good dividends to the investor. So investing in a large cap/diversified scheme offers good stability with minimized risk, this is an ideal choice for a beginner level investment.

How to Construct and Manage your investment Portfolio?

There are three essential factors required to construct and manage your investment portfolio, read more to find out.

Portfolio construction

The main purpose of any investment begins with a steady and strong portfolio construction. Portfolio construction helps you evaluate risk, which is a very important determinant of your investment portfolio. Depending on the risk appetite of the investor, money managers will establish a particular approach towards portfolio construction. But in a general scenario, managers usually prefer a mix bag of equity and debt, a kind of a diversified approach. This is also affected by the current market volatility and the securities selected for the portfolio.

Investment Strategy

An investment strategy is the approach you take towards handling a given set of funds. Since capital markets are volatile over a period of time, they have to be carefully monitored and studied in order to develop the right approach for managing the portfolio. This also helps in setting up real time goals and expectations with respect to your investment portfolio.

Policy Statement

A policy statement helps to evaluate the investment goals and the level of risk associated with the same. This will comprise of your small-term, medium-term and long term goals and financial requirements. A well-established policy statement will allow you to set a standard benchmark which can be the basis of future vs current vs past performance. A policy statement also takes in personal constraints which can deter you from investing further.

Know about Mutual Fund Schemes with Insurance Cover

Recently Mutual Fund houses have developed a new facility of providing insurance cover along with a mutual fund investment. The terms and conditions state that the investment will be via SIPs only. The minimum tenure of the investment will be 36 months and the cover will be on a group basis and not on an individual.

The process of investing in the life cover begins in specific multiple of your SIP ranging from 10x to 30x. If you spend a monthly SIP of ₹1000, then the life cover will be between ₹10000 and ₹30000 respectively.

Life Cover in SIP of Mutual Funds

The maximum life cover provided is between 21|25|50 lakhs in all schemes, depending on what the fund house offers. The minimum age of enrolment is between 18-51 years while the maximum age of entry if limited to 55-60 years. There is no such specific requirement of a medical test to be undertaken but you need to submit a declaration of good health for successful eligibility. In case of multiple holders within the scheme, only the primary holder will be eligible for cover.


You should be well aware of the fact that not all fund houses provide the facility of SIP along with insurance. Many times, you will likely be tempted to stay within the scheme for the insurance facility, but this should not be the case. You can always opt for a different insurance scheme and a different mutual fund. Another reason to keep your insurance separate from investment is because if you make a partial withdrawal, the life cover will cease to exist.

FAQs on Managing your Mutual Funds and Insurance

What is SIP with Insurance?

An SIP with insurance is a facility by which you can get an insurance cover along with your mutual fund investment. The minimum tenure of investment is 36 months and the life cover is calculated on the basis of SIP multiples.

How do you make money from a mutual fund?

Like all other investment instruments, a mutual fund is required to generate market related returns. When you invest in a mutual fund, you are indirectly investing in stocks, bonds or both. These securities chase a particular benchmark index which generates returns over the tenure of the funds. The tenure ranges between 1|3|5|10 years.

Which bank is best for mutual funds?

There is no such one best bank but there are multiple banks/asset management companies which provide a series of top performing funds across different sectors of the economy (short term, midterm, long term).

What is SIP insure in Reliance Mutual Fund?

This is a new investment facility provided by Reliance Mutual Fund whereby free insurance cover is provided with SIP in equity schemes. It is similar to a mutual fund SIP with insurance plan.

What is SIP plus?

An SIP plus is an add-on investment solution facility provided by ICICI Prudential Asset Management Company Limited. It is an SIP with insurance plan where you get life cover on the basis of SIP multiples.