Fund Switching Advice as on 12 Sep 2009

Dear Policy Holders,

You were addressed last 18 May 09 when the Nifty was at 4323. Since then almost four months have passed and the Nifty has advanced by about 500 points (about 12 pc up). The time has come when I share with you some concerns. I take it that funds in long term insurance plans should not be subjected to speculative risks but the aim should remain to keep out performing the other asset classes.

Of the policy holders, who are in their ripe years have to be more conservative, who are in middle years should be following the middle path and lastly, the young ones should be mostly keeping funds in 'growth fund' or 'equity fund' (this means that equity oriented funds should be preferred).

The present economic situation and the concerns of RBI governor about inflation indicate that the coming times may be seeing some contraction in money supply. This should prove to be slightly adverse for the share markets. In the long run, however, I do not perceive any big threat to markets. The prudent approach would be to switch funds as given below:

- the aggressive should switch in to 'balanced fund' entirely.

- the moderates should be switching in to 'defensive fund' entirely.

- the conservatives should be coming to safety of 'secured fund' entirely and switch 5 pc of the fund value in 'growth fund' in each of the coming calender month.

The ones who have any confusion may write to me or talk over phone.

As most of you may be having larger investable surplus on your hands, I invite you to discuss the matter and know as to how best and at minimal cost your future goal may be achieved. Please keep in mind that your savings have to be grown in a manner where there is safety and where are returns capable of beating inflation. If this is not ensured, you may encounter difficulties in your years after retirement. This is particularly important for the people who are going to live for long years after retirement. Since nobody can know one's life span, it is only the way to take some steps in time to ward off financial incapability in old and older age.

We are all lucky to now have host of plans to take care of our needs, even health and disease related needs, please give me an opportunity to discuss them with you in person.

HariOm,
Krishna Kumar Khandelwal