Are you always at a loss while planning your finances? Are you aware of the investment options available in the market?
How best can you plan your finances?
What are the crieria for evaluating an investment option?
Are mutual funds profitable investment options? When and how should one buy mutual funds?
In an hour-long chat on Thursday, financial planning expert Sailesh Multani offered some valuable tips. Here is the transcript:
Sailesh says, Hi, goodafternoon and welcome to this chat session
Pankaj asked, Hello Mr Multani, I could save Rs 50,000 per month. Where should I invest this money. Goals are Kids higher education, Marriage and our retirement. I am 38 yrs old with 2 kids - 9 yrs/5yrs.
Sailesh answers, at 2010-07-08 12:59:46Hi, you haven't given me your timeline. Assuming that each of your goal is 10 years away, you should have a portfolio that is dominated by equity funds and stocks. Since I don't know your risk profile, it will be difficult to suggest an asset allocation but equity allocation in the range of 60-70% will be a good idea. Also, allocate 10% of your total portfolio to gold. Gold ETFs will be ideal for you instead of physical gold. You can liquidate your gold ETF when you get your daughter married to buy the physical gold.
sandeepnaik asked, Sandeep Says,Hi Mr Multani Is LIC or investments in the for of Bank FD's a better option for long term investments?
Sailesh answers, Hi, if long term means five years and more then investment in stocks and equity funds makes sense. Insurance should be taken to cover the risk on one's life; It should never be taken as an alternative to investments. Insurance policies cannot substitute pure investment products like equity and debt funds. Bank FD is a good choice; it helps to add safety and stability to your portfolio.
SAM asked, WHAT IS THE DIFFERENCE BETWEEN SIP & MIP. PLZ TELL SOME TAX ADVANATAGE SAVINGS MF THNKS REGARDS SAM KOL
Sailesh answers, Hi, MIP stands for Monthly Income Plan offered by most mutual funds in the country. It is a debt fund that invests 15-25% in equity and the balance in debt. It is suitable for investors with low risk profile and investment horizon of 24 months. SIP stands for Systematic Investment Plan. Its a style of investing in mutual funds. A fixed amount of money is invested into a particular fund on a pre specified date. SIP ensures that investments are made at regular intervals without having to bother about timing the market. Since investment in a fund is made at various NAVs, it tends to average out the purchase price over the long term. By long term I mean five years and more. My recommendations in the tax savings fund category are Franklin India Taxshield and Fidelity Tax Advantage Fund
Manish asked, I want to know what all mutual fund is good where I can invest. mostli SIP Product i want.
Sailesh answers, Hi, I usually recommend large cap funds with proven track record. These include HDFC Top 200, Franklin India Bluechip Fund, Sundaram BNP Paribas Select Midcap and Fidelity Equity Fund.
RS asked, What are Gold ETFs? Why and how much one should invest in such an investment product? And what should be the investment horizon for such a product?
Sailesh answers, hi, according to me investment in gold should be done through Gold Exchange Traded Fund (ETF). Every unit of Gold ETF is backed by half or one gram of physical gold. The units of Gold ETF are held in demat form. Hence, there is no botheration about safekeeping of gold that is associated with physical form. Also, the gold held by Gold EFTs are backed by physical gold of 0.995 fineness which is secured and insured. Gold ETF score on the wealth tax front too; they are not considered as wealth for Wealth Tax purpose. Physical gold is considered as wealth for wealth tax purpose. Also, Gold ETFs are treated as long term capital assets if held for more than 12 months from the date of purchase. One can avail of the indexation benefits claim concession from long term capital gains tax, if any. Don't rush into buy gold. Invest a small a sum every month. Spread your investments over the next 6-12 months. Invest only 10% of your overall portfolio in gold.
BVENKATM asked, I WANT TO INVEST IN DSPBR SMALL & MIDCAP FUND, HDFC MIDCAP OPPORTUNITIES FUND AND SUNDARAM S.M.I.LE AND BIRLA MIDCAP IS THE FUND CHOICE GOOD( HORIZON - 3 YEARS). IN THE LIGHT OF RISING INTEREST RATES SUGGEST ME TWO SHORT TERM DEBT FUNDS(HORIZON - 1 YEAR).
Sailesh answers, hi, all the funds you have mentioned are among the better performers. Dedicated midcap funds should not occupy more than 20% of your equity portfolio. these are very volatile and can test your patience when the going gets bad. Though 3 years is fine, I would recommend that you increase your investment horizon to 5 years. I am not recomending any short term fund to investors. On the debt side I would recommend Bank FDs
link asked, hi , i have currently invested in HDFC top 200 ( dividend ) and DSPBR top 100 equity ( dividend ) and taken SIP option for both..i am looking for 2 year horizon..can u please advise whethr tehse are beneficial or should i move out form both
Sailesh answers, hi, 2 years is not a long enough period to reap the benefit of investing in equity funds. Your time horizon should be atleaat 5 years. Equities need time to deliver returns to their full potential. I would recommend that you switch to MIP which have 25% exposure to equities and balance to debt.
Suhas asked, Hi Mr.Sailesh I am having working with MNC they deduct my TDS from my salary. Our Accountant told me to invest in Some tulif or Mutual Fund. Can you tell me what are this Investment and what benefittes they will give me in future. and also the risk factor in such investment. Thk in Advance.
Sailesh answers, hi, your accountant probably suggested ULIPs and tax saving mutual funds popularly known as ELSS. ULIPs are insurane plans and not recommended for any portfolio. ELSS are equty mutual funds. these funds invest your money in equity market and therefore carry maximum risk. These are subject to mandatory lock-in period of 3 years.
partha asked, currently i m investing in the following funds HDFC Top 200(1000),DSP top 100 equity(1000),Birla sunlife frontline(1000),Reliance banking(1000),Reliance Regular savings fund(1000),ICICI infrastructure(2000),ICICI discovery(1000),IDFC premier equity(2000),DWS investment opportunity(1000),Birla sunlife midcap(1000),Morgan stanley A.C.E(1000),HDFC prudence(1000)....please advice me should i continue all of these funds..
Sailesh answers, hi, so many funds in your portfolio... wondering how do you manage such a large portfolio. My advice is to reduce the number of schemes to 4 or 5. you can do away with Reliance Banking Fund, Morgan Stanley ACE, DWS Inv Opp, and ICICI Infrastructure to start with.
dala asked, Hi Mr. Multani, I have around 15 lacs which I want to double in three - five years.... Also I have additional 50,000rs I can invest every month..... what best mode you suggest for investment with minimal tax liability? I am 28 year old and looking for Stability and security for my and my family's future.... PLS ADVISE!
Sailesh answers, hi, I dont know if you will be able to double your money in 5 years but the only way to do is to invest in equity funds. Equity funds have the potential to grow you money faster. Aim for return of 15% p.a. Dont run so fast so as to feel breathless. Invest in equity funds for long term and review your portfolio every 6 months. Given your age, you should have a portfolio dominated by equity funds and stocks. Having said that dont forget to diversify your portfolio. Invest a small portion in debt (Bank FD, PPF) and Gold ETFs
Arun asked, Hi Sailesh, I am earning 35K per month.Can u advise best possible investment options?
Sailesh answers, hi, your investments should be guided by your investment obejctive. Fix your investment objective, ascertain the time horizon within which you want to achieve your objective and the risk you are wiling to take. E.g. if your objective is to grow your money, you have investment horizon of 5 years and willing to take high risk, then investment in equity funds and stocks are the best options.
sumit asked, hello sir i need 2 crore after 18 years. i am earning 60000 and savings 25000 per month.
Sailesh answers, hi, assuming that your investments grow at an average annual rate of 12%, your investment of Rs 25,000 per month should grow to Rs 1.89 crores approximately. Well, very close to the target! Go ahead and start investing in well managed diversified equity funds via the SIP route. I have given the names of funds recommended by me in this chat earlier.
sur asked, Hi Sailesh have invested in DSP BlackRock Focus 25 Fund - Dividend and taken up HDFC Youngstar Supreme Suvidha.Need your advise - are these worthwhile?
Sailesh answers, hi, my frank and honest answer to your question is these are not my preferred investments. Assuming that you have an investment horizon of 5 years and you willing to take risk, the ideal investment should have been equity funds. While DSP BR Focus 25 is an equity fund, I would rather invest in DSP BR Equity fund which is a combinaton of large and midcap stocks. The fund has a proven track record of over 5 years to show for.
KALP asked, You asked, Hello Sir How is this new AXIS TRIPLE ADVANTAGE FUND Please advice
Sailesh answers, hi, this is an NFO. I always recommend investors funds with proven track record of 5 years and more. Names of such funds have been given in this chat earleir.
sekhar asked, I would like to Know Growth or Dividend which option is better for SIP for 2 years fund?
Sailesh answers, hi, if your objective is to grow your capital,then gorwth option is the best. It allows you to use the power of compounding to the fullest extent possible.
MANOJ1 asked, multaniji, i invested in mutual funds 2 months ago,by an investment expert., the return is not even 1% in 2 months. my mutual fund advisor is asking for his fees of about 1.5% of portfolio. , since he says the companies are not paying. i am not confident, about his performance , since markets cannot be as per his coomnd. is it possible that i should take interest myself., and tell the advisor, that since i am doing , i will not be able to pay. pl advise.
Sailesh answers, hi, you need to be sure of the competency of your investment adivsor before you engage his services. In my opinion the basic trust in advisor is missiong. If possible get a reference check done through his other existing clients. Also, 1.5% of your investment amount is on the higher side. In my view 1% should be more than enough. Please bear in mind that investment is a specialisd activity. Hence, it always pays to engae the services of a trusted, competent and honest investment advisor. Investment in equity funds take time to grow. 1 or 2 months is too less a time frame to judge the performance of the funds or even your advisor.
sure asked, Mr Sailesh I am close to 50 years. My monthly expenses are around 40 K. Today my savings accumulation is around 50 Lks. I would like to quit my job and do something else. Is there any way i can invest this 50 Lakhs and get a retun of 40 K per month to cover my monthly expenses
Sailesh answers, hi, to generate 40k per month from a corpus of Rs 50 lakhs, you need an anverage annual income of 9-10%. In today;s scenario there is no investment product that gives you assured return of 10%. If you want regular cash flows then you will have to reduce your requirement to Rs 25k. Dont forget the tax implication and inflation.
jyoti asked, I am having salary of Rs 10K only in a BPO. And i want to have some good pension plan after 20 years. What you can suggest good for me? I am stil 28 year , single woman
Sailesh answers, hi, you need to work out a retirement plan for yourself to ensure that you keep generating regular desired income from your investments post your retirement. The best way to build your portfolio is to start SIP in 3-4 well managed diversified equity funds. If possible engage the service of a honest and competent financial planner to help you with your retirement planning.
aj asked, hi sir i am 42 years old having 2 kids 5 year son and 2 months daughter, my current inhand is abt 1 lac pm., stay in a rented house - 20,000, savings of about 14 Lacs, please advise for future ..
Sailesh answers, hi, the answer to your question lies in getting a comprehensive financial plan made for yourself. The plan will guide you as to how should you go about building a portfolio for each of the goals you have set for yourself.
suresh asked, I have invested in Birla Sunlife International Equity MF in NFO currently at loss. What is the future of this MF.
Sailesh answers, hi, switch to better performing fund like Birla Frontline Equity Fund or even better redeem and invest in HDFC Equity Fund.
rajesh1887 asked, which option is best either PPF or Pension Fund????????
Sailesh answers, hi, if you are building your retirement corpus then PPF is certainly the best. Pension plans are not the ideal investment product to build your retirement corpus.
krish asked, Hi Sailesh, I am started SIP in IDFC Prem Growth A plan from Jan 2010 till next 100 Month.. What reaturn do expect from this investment
Sailesh answers, hi, as far as returns from equity funds is concerned, be it the large cap or midcap or small cap funds, one should not plan in excess of 15%.
suhails asked, Hi, I am 28 years old gettiong married in aug...my monthly salary is 40000, how can i plan my savings. i have my own flat.
Sailesh answers, hi, you need to ientify your investment goals first and then build a separate portfolio for each such goal. Since each goal will have its own investment horizon and risk profile, the portfolio of each such goal will be different in terms of asset allocation i.e. mix of equity, debt, gold and real estate.
sure asked, Sir Good you suggested about inflation.For a family of 4 ,with a own House to live,with no education expenses( Covered oterwise) at what rate of percenatge my expenses will grow
Sailesh answers, hi, in my view one should plan his/her retirement taking into account inflation rate of 8% p.a. for expeneses such as travel, education, marriage, medical the rate should not be less than 10% p.a.
xlanks asked, Dear Sir, I m having 50 lakhs with me after selling my plot. now i want to buy a big flat in mumbai after 5 years. I want to invest this money wisely. can u suggest me some safe options with decent returns. Are there some schemes specifically related to this
Sailesh answers, hi, if you have a long term capital gains to pay then it will make sense to invest the amount equal to the capital gains in long term capital gains tax savings bonds offered by National Highway Authority of India (NHAI) and Rural Electrifiaction Corporation (REC). The maturity is 5 years and the rate of interest in the range of 5.5% -6% p.a.
rakeshmaurya asked, hi sir my self rakesh. i want to know that during filing of IT return which amount is deducted during calculation of income tax Housing loan principal repayment or housing loan interest paid or BOTH please inform
Sailesh answers, hi, while computing your net taxable income, you will get get deduction for both capital repaid and interst on housing loan paid during the financial year.
birup asked, if i have one crore today and would like to retire, how would advise me to invest this amount, to take care of my fnancial needs? i have no liabilities and have my own home. thank you.
Sailesh answers, hi, you need to give me more details like your age, current monthly household expenditure, details of your dependents, lifestyle expenditure, etc. you can write to me separately at: sailesh.multani@rediffmail.com
Nitin asked, Sir, I have an PPF account and I invest in it every year. I am thinking to open a PPF account for my daughter also..Is this a good option for savings for my daughter?
Sailesh answers, hi, yes it certainly is a good idea to open a PPF account for your daughther. Who pays 8% interest p.a. on a compouding basis that too tax free? Only PPF. Go ahead and open the account.
akash asked, Sir, I am investing in Sundaram BNP Selec Mid cap, DSP World Black Rock Fund & Sundaram PSU Thematic plan, through SIP of Rs.1000/-. Are these good investments. Pls. advise.
Sailesh answers, hi,Sundaram PSU thematic fund. Invest in HDFC Equity Fund
sandykap asked, is it appropriate to buy gold at this time for 8-10 year horizon? how much total wealth can be or should be gold. current age is 37
Sailesh answers, hi, buy gold on every dip in price. Dont rush in to buy gold. Allocate 10% of your total portfolio to gold
esa asked, Hi, How will new tax code affect the PPF investments? Thanks
Sailesh answers, hi, as per the 2nd cut of DTC, there will be not changes to the exisiting strcuture of PPF.
sri1723 asked, Hi, I have monthly income of 34K and a home loan of 12lakhs.How do you suggest my investements to be. I am 32 yrs ,married
Sailesh answers, hi, whatever your savings after paying your EMI, should be invested into equity funds. You will have to be a little aggressive with your investment strategy. But dont take undue risk. In my view havinga portfolio with 65% equity, 25% debt and 10% gold should be a good idea.
Sailesh says, We have run completely out of time. I thank you all for participating in this chat session. If you have any questions which were not answered during the chat, you can mail them to me at: sailesh.multani@rediffmail.com.
