How to create wealth in the long term
In an online chat with Get Ahead readers, Anil Rego, CEO and founder, Right Horizons, discussed tips to create wealth in the long term.
Here are the unedited excerpts:
jignesh palan: mr anil u think property investments in mumbai will keep giving higher returns in coming years
Anil-Rego: In the long term property will give steady returns. However there would be periods of poor or negative performance. Right now, the mumbai real estate market is seeing some stress.
RAJAT BANERJEE: I am 43 and I have the following SIPs currently: DSPBR Equity G- Rs 1000, HDFC Prudence G Rs 1000, HDFC Top 200- G - Rs 2500, IDFC Premier Equity A -G- Rs 2000, UTI dividend Yield -D -Rs 2000 and Magnum Emerging Business -G- Rs 1000, . Please suggest any modification, alteration and/or addition to my portfolio? I have no loan at present. Please suggest.
Anil-Rego: The funds you have chosen are good. Maybe you could drop one of the funds and consolidate a couple of funds where you are investing rs 1000 per month
Prashant dash: I am earning Rs 80000 PM and I can easily invest up to Rs 30000 PM for next 15 yrs can you suggest some portfolio in addition to what i have mentioned earlier to get approx. 2~3 cr corpusin next 15 yrs.
Anil-Rego: If you invest about 30,000 pm for the next 15 years, you are likely to be able to achieve a corpus of Rs 2 cr. If markets give better returns than 15% pa then it could be higher. However, at the end of 15 years, if markets are down it could be a little lower, though market tend to catch up over a period. If market give you a spike in returns, you could switch to funds like FT Dynamic PE fund.
Shalabh: Hi,I need 1Cr after 10 YRs. I am investing in MF thru SIP from last 3 yeart 14K per month in HDFC Top200, ICIC Pru Discovery, Birla SL Equity (G) and ICICI Bluechip. Do you suggest something else?
Anil-Rego: The only fund I may want you to relook at is Birla Sunlife Equity which you could replace with Birla Sunlife Frontline Equity.
Ritesh Sharma: I have been investing systematically into a mutual fund over past one year. Please let know if i should systematically disinvest and reinvest in other mutual funds.
Anil-Rego: SIPs are best in the long term of 3-5 years. Use a combination of funds so that your dependence on any one is not too high. Continue with it and stop only if the fund is consistently performing poorly vs the benchmark for the same category of funds.
Prashant dash: I am investing 1 lakh in PPF per year and 60000 in SIP, relaince growth(24000),HDFC top 200(24000) & birla sun life (12000), I am 40 yr old how much I can accumulate in next 15 yrs
Anil-Rego: Your question is not very clear. It appears you are investing Rs 60,000 per annum in SIPs. ie Rs 5000 per month. If so, you would build up about Rs 61 lakhs in this period.
Jeswal: Dear Anil, can I just invest in stocks to create Rs 5 crore in 15 years. I can invest up to Rs 50,000 every month in stocks.
Anil-Rego: You should be able to build up a corpus of about Rs 3.3 cr in 15 years at a 15% return, if you invest Rs 50,000 per month. If on the other hand you are able to achieve an average return of Rs 19% pa consistently over this entire period, then you would be able to achieve your targeted return of Rs 5 cr.
This would however require you to take risk and you can do so by investing in equities. I would suggest you invest in a combination of equities and also equity mutual funds.
alex: Anil bhai: Need you help. I have a portfolio consisting of NSC, Postal savings, pesnion plans in which I am investing Rs lakh or so every year. Is that enough for me to create wealth worth Rs 1 crore in 5 years. I have two daughters and a son, all studying in college.
Anil-Rego: Your data is not very clear as you seem to have been missed out. In a short period of 5 years, building up wealth worth Rs 1 cr would definitely be a challenge. The instruments that you mentioned are low risk ones as well and the returns thus would also be in a lower range. I have given the monthly investment required to build up a crore in 10/15 years below.
naman: How to find out a good wealth advisor who can help me create long term wealth?
Anil-Rego: It is important for you to have a good financial advisor. You need to spend some time studying the individual or the company, understand their model, are they suitable to your need, look for someone who can give you a comprehensive solution, check their customer agreements if they have, check their sample reports.
ulfat: Rego Sir, tell me 5 basic rules to create long term wealth. I am 27 and earn Rs 50,000 per month
Anil-Rego: Undertake a financial planning, Manage risk, Take a long term approach to your investment, Disciplined investing and Track your investments.
dananjaypuri: Sir, plz tell me how I can earn Rs 1 crore in 10 years. I can invest Rs 20,000 every month. What are the best investment options for me?
Anil-Rego: If you are able to increase your time horizon to 15 years, it is possible at Rs 20,000 per month. In 10 years, you would need to invest Rs 36,500 per month assuming a 15 per cent return. You could use systematic investing into a combination of midcap and large cap funds.
tushar: What could be teh ideal portfolio of a 30-year-old with an investment horizon of 50,000 per month look like?
Anil-Rego: First you need to decide on your Risk Appetite and and Asset Allocation. However considering your age group, you can look at following asset allocation10 per cent in Gold50 per cent - 60 per cent in Equity - through mutual fund schemes. Based on your risk profile you can consider allocating between Large Cap, Midcap and Balanced Fund.
In Large cap you can look at funds like Birla Sunlife Frontline Equity, ICICI Pru Focussed Bluechip - In Midcaps you can consider funds like HDFC Midcap Opportunities, ICICI Pru Discovery and for Balanced Fund you can consider fund like FT India Dynamic PE fund
Remaining ~30 per cent - 40 per cent you can invest in Debt Funds. However considering your needs and risk associated with the life you can also add a Risk Cover in your Portfolio
hitansh: How do I know if my long term portfolio investment is doing well or not?
Anil-Rego: In order to check the performance of your long term portfolio, you need to take following steps..1) Compare your portfolio with the Benchmark Index2) Also see how the portfolio has performed during various period) And whether the designed portfolio is inline with the objective.
Photographs: Uttam Ghosh/Rediff.com