Will it be a right decision to reduce my SIP amount to Rs 5,000 from Rs 10,000 because of poor returns?
The main benefit of SIP is rupee cost averaging, an investment technique applied to regular fixed instalments. More units are bought when the market price of shares is low and lesser units are bought when the price is high. Hence, you should continue your SIP as reducing the SIP amount would deprive your portfolio of buying units at lower prices.
Can I do a quarterly or half yearly SIP to invest in mutual funds?
Yes, most mutual funds offer quarter-ly SIPs in their respective schemes. A few offer half-yearly as well as annual SIP option to investors. Alternatively, you may invest through lumpsum mode at regular frequencies, which may be best given the uncertain nature of your income.
I have an equity SIP done through a bank. How do I switch it a direct plan?
-P K Kumar
You may register yourself for online access on AMC websites or through any of the mutual fund aggregator portals and switch to a direct plan. The switch may be subject to exit load though you are switching to a different plan under the same scheme, although this may differ across AMCs. The switch would be regarded as redemption requiring capital gains taxes, if any, to be paid.
Is indexation only in debt fund? How is it done to calculate tax liability?
Indexation benefit is only applicable to non-equity oriented mutual funds (debt funds, foreign equity funds, fund-of-funds) and is based on a cost inflation index (notified by finance ministry). If held for more than three years, the cost price is indexed to reflect the cost price in today's terms and the gain (computed as difference in final amount and indexed cost price-instead of actual cost price) is taxed. Hence, indexation benefits investors as it lowers tax outgo.
Is there lock-in period for gold ETFs?
There's no lock-in period for investing in gold ETFs. All ETFs including Gold ETFs are listed on an exchange and can be traded, subject to liquidity, i.e., available of buy/sell quotes.
The writer is director, Investment Advisory, Morningstar Investment Adviser (India). Send your queries to firstname.lastname@example.org