Want to invest in a mutual fund? Want to know whether you should sell your units? Not sure if you have zeroed in on the right fund?

In this volatile investment climate, it is natural you would be worried.

Mutual fund expert Dhirendra Kumar answered your mutual fund questions in a chat with Get Ahead readers on May 23.

Dhirendra Kumar is the founder and CEO of Value Research, a mutual fund research and advisory firm set up in 1991. He is also the editor of Mutual Fund Insight, a magazine dedicated to mutual fund investors.

For those of you who missed the chat, here is the transcript.

harry asked, i have about 20000/- surplus. i want tp know where should i puit my money in?

Dhirendra Kumar answers, If you are investing for few years, invest in a good equity fund and invest regularly.

Anjali asked, is it wise now to invest in funds or wait till the market falls further?

Dhirendra Kumar answers, You cannot time the market. Invest regularly. It not only helps you remain focussed on your investment programme but is also good for your stomach. Besides, you also make law of averages work to your advantage. Markets turnaround when you least expect it.

Kamal asked, Is the NFO Tata Equity fund safe to invest in? Is it the right time to invest in a mutual fund as markets are doen?

Dhirendra Kumar answers, A long short fund is a not a good idea. See the earlier answer.

sangeetha asked, what is Mutual fund and how it differs from share

Dhirendra Kumar answers, Equity fund is like buying a number of shares. The diversification reduces your risk. It is convenient.

Ravi Mittal asked, Hi, I want to know what is the basic functionality of mutual funds. what happens to dividend and bonus paid by company on the shares holding. WHat is the basis of increasing NAV of mutual funds

Dhirendra Kumar answers, All the benefits to the fund gets reflected in the NAV. That is the appreciation, dividend, interest income or bonus on all shares held by the fund.

GargiTewari asked, hi, I am new to Mf. Is is good time to start investment via SIP?

Dhirendra Kumar answers, It is always good to invest regularly in a good equity fund for your long-term savings. This helps you remain focussed on your investment programme but is also good for your stomach. Besides, you also make the law of averages work to your advantage. Beginners should start with a balanced fund. These funds get you growth with stability.

girish asked, should i invest old funds or new funds

Dhirendra Kumar answers, Older funds are better simply because you know how they behave and what they look like as compared to a new fund where you know nothing about its attributes.

Narayanan asked, Tell me regaring where to invest & how for tax savings?

Dhirendra Kumar answers, Tax saving funds are a good choice. You cannot withdraw for three years after investing.

Sathish asked, The recent downfall of the market has resulted in the fall of NAV's of all the leading MF houses. I am running a SIP of 9K per month in three MF houses (SBI [Get Quote] Tax Magnum, HDFC [Get Quote] Tax saver & Franklin Tax Shield). Is it advisable to continue??

Dhirendra Kumar answers, Continue investing. As you cannot withdraw for three years, these three funds combined have good potential to deliver a decent return.

malik asked, What are the options for NRIs? Any tax implications? which are the best ones? dividend paid where?

Dhirendra Kumar answers, NRIs are eligible to invest in most funds on a repatriable basis. The only problem is TDS (withholding tax) on short-term gains and dividend. So, avoid putting in the dividend plan and choose the growth plan of a good fund.

Kuchela asked, If I start a SIP on a Tax saving fund for 3 yrs, will I be able redeem the points only after 6 yrs after I paid the first SIP instalment?

Dhirendra Kumar answers, The three-year lock-in applies to each investment from the date of investment. While redeeming funds, follow the principle of first in first out, ie you redeem the oldest investment first.

venkatchat asked, I have reliance growth and Birla basic Industries mutual fund units. Is this right time to sell these ?

Dhirendra Kumar answers, Good funds for a few years investment horizon.

raju2006 asked, Sir I'm going through the offer document of MF and it states that "Any capital gain arising on withdrawal of part or whole of the investment made as under the scheme after the completion of the lock-in-period, will be considered as long term capital gain and will get taxed u/s 48(2) of the Income Tax Act, 1961, if the Magnums have been held for a continous period of over three years" Please explain what is a capital gain. If possible explain me with example

Dhirendra Kumar answers, The tax laws have changed. If you gain from investment in equity funds or stocks after holding your investment for 365 days, then it is treated as long-term capital gain and is tax free.

saurabh asked, Which one is best Balanced fund? In present scenario can we invest in these funds?

Dhirendra Kumar answers, Good Balanced Funds -- HDFC Prudence, DSP ML Balanced, Sundaram Balanced and UTI Balanced Fund.

fatu asked, Does this stock market silde has any effect on ULIP

Dhirendra Kumar answers, Stocks market fall will impact market linked ULIPs too. Anyway, they are not a great investment vehicle.

RAN asked, SIR I HAD INVESTED 1.5 LACS IN SBI BLUECHIP, RELIANCE [Get Quote] EUITY, HSBC ADVANTAGE, AND IN LAST ONE WEEK HAVE INCURED A LOSE OF 13000.00 IN TOTAL ,SHOULD I REMAIN INVESTED OR WITHDRAW??

Dhirendra Kumar answers, Equity funds lose in a fall like this. But, if you have invested for a few years time, why exit? These investments should prove rewarding over time. Invest regularly, not lump sums you have made in the fund IPOs.

Rahul asked, apart from VR rating, what point shall one consider before selecting a equity fund?

Dhirendra Kumar answers, Consistency of rating and the tenure of the fund manager.

Praveenmm asked, Recently I had switched over to FT India Opportunuties Fund from FT BLUE Chip Fund. Was it a good move?

Dhirendra Kumar answers, FT Opportunity will give you a rough but speedy ride. Switch can be good if you can happily absorb the shocks.

ranju asked, i have invested in Fidelity dividend option and SBI Magnum tax gain scheme....should i hold on to it or sell them?

Dhirendra Kumar answers, These two funds are evolving well. They are volatile but rewarding too.

stockalertz asked, SIR, CAN YOU PLEASE SUGGEST WHICH OF THE FOLLOWING IS BETTER OPTION CONSIDERING INSURANCE AS THE MAIN CRITERIA. 1. ### ULIP #### _________2. #### MUTUAL FUNDS AND TERM INSURANCE ######. Please answer my question

Dhirendra Kumar answers, Term insurance is the best way for anyone seeking personal risk coverage.

hi_brahmachari asked, Hello Dhiren.....I have just invested in Reliance Growth Fund and SBI Global Fund...wats the future???

Dhirendra Kumar answers, Reliance Growth is a good choice though volatile. Magnum Global is bit too risky based on its portfolio.

anil asked, I want to invest in HSBC india opportunities fund what is yr opion

Dhirendra Kumar answers, Hold on. Let it prove its credentials.

Vinod asked, Sir..Please answer my question. I have asked this question on VRO(Value Research Online) also but couldn't get any reply? What is your take on FIDELITY SPECIAL SITUATIONS FUND considering the fund house name and past success of similar funds from them in UK,US? I am ready to keep 100000 invested(through SIP) in it for a period of 10 -15 years? Please advise? Also.are there any reality based MFs as of now?

Dhirendra Kumar answers, Let it prove itself for any time period. It's just a good story for now. And there is no dearth of nice options.

ambrish asked, whether long term capital gain tax is applicable in case of balanced fund

Dhirendra Kumar answers, Most equity oriented balanced fund are complying with revised stipulated allocation of 65% in equities. So gains on these will qualify for long-term gains benefit.

redice asked, I would like to invest a sum of money over a period of time something like Rs 400000 every month over 12 months with an aim of maximising return over the next 3 years. Are mutual funds the right asset category to be looking at?

Dhirendra Kumar answers, Mutual funds is the most suited vehicle for such an investment plan. If you are investing for the long-term, ie for few years, then invest in good equity fund and invest regularly. Don't try to time the market.

sal asked, Sir I am a very new to market and want to invest do you suggest me to go ahead or wait till the markets come up again

Dhirendra Kumar answers, Markets go up and they go down. Also, markets turnaround when you least expect it. So the way around this is to invest regularly in a good equity fund with a long-term focus.

g_agarwall asked, advice some good equity funds

Dhirendra Kumar answers, Good Equity Funds -- DSPML EQuity, HDFC Equity, Franklin Prima Plus, Sundaram Growth, Birla Sun Life Equity.

umesh asked, hi dhiren, am totally new to MF, so far i have invested 20k in kotak Elss, 10k in birla top 100 funds and 2k SIP of dsp tiger(so far tenure is 8 months). my age is 30 yrs and my monthly income is 25k. Please advice am going in right direction or shld i need to change in portfolio. am also intrested in investing abt 50k this year

Dhirendra Kumar answers, Invest regularly and don't look at the values everyday. You are holding promising funds. Don't act unnecessarily.

gh asked, how many funds should a person invest in . how many provide the diversification needed.

Dhirendra Kumar answers, A balanced fund can provide not only adequate diversification but tax efficient asset allocation and rebalancing. But I guess with two or three equity funds you get added diversity of fund management style.

jagjiven asked, Dear sir, How would you rate DSP TIGER and HDFC top 100 for investments. Please elaborate why "ULIPS are not a great investment vehicle" as I have just invested in Aviva [Get Quote] ULIP Growth fund.

Dhirendra Kumar answers, DSP Tiger and Top 100 are are evolving as good funds. ULIPs are expensive and not very liquid. In my opinion, one should not mix insurance and investment as these two objectives change with the times and one should be able to deal better with it independently.

donquixote2 asked,  I hope to get your valueable answer - thanks for answering this. I've 2 questions: 1. Have you some measurements of effectiveness of the ValueResearch ratings given to MF's? With a lot of historical data available it would be good to know if these objective ratings are supported by real perf of funds. 2. Based on VR ratings I've begun shuffling my portfolio towards higher rated funds - I've completed the selling part and now am planning to re-enter the market into better funds - would you advise using SIP/STP's for this as well? Thanks a Tonne - DonQuixote

Dhirendra Kumar answers, Value Research Fund Rating has been in existence since 1993. It has proved very useful as basic filtering tool. It has proved rewarding too.

Dhirendra Kumar says, Good bye everyone. Thanks for logging on. Dhiren