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Rediff.com  » Business » 'A good monsoon will rev up the stock market'

'A good monsoon will rev up the stock market'

May 27, 2010 14:25 IST

MoneyAre 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 rediff.com, financial planning expert Sailesh Multani offered some valuable tips. Here is the transcript:

Sailesh says, Hi, goodafternoon and welcome to this chat session


parvez asked,  iam having 3 lakh were to invest for maximum returns ,i can wait for 2 years
Sailesh answers,  at 2010-05-27 12:54:12Hi, the best investment for you is monthly income plan (MIP) offered by mutual funds. Monthly Income Plans (MIPs) are offered by most mutual funds in the country. MIPs are hybrid funds with 10%-30% exposure to equities and balance to debt. While the debt portfolio is designed to generate regular income and add stability, the equity portfolio aims for increasing the overall returns. Since there is an equity component, the investor should be willing to take some degree of risk. Also, the returns are not guaranteed or assured unlike a bank fixed deposit. Although the name Monthly Income Plan, monthly income by way of dividend is not assured. Dividends are paid subject to profits made by the fund. If you are opting for dividend option, then quarterly dividends are ideal. If you are not aiming at generating regular income, then growth option is the best. These funds are treated as long term capital assets if held for more than one year from the date of investment. You can avail of indexation benefit to reduce your long term capital gains tax on the appreciation, if any. The ideal investment horizon to reap the benefit of investing in an MIP is 18-24 months. Expected returns should be in the range of 8%-10% p.a.
bunny asked, i have 60 thousand to invest for good returns i can invest for 2-3 years
Sailesh answers, The best investment for 3 years according to me would be balanced funds. Balanced funds invest atleast 65% of the corpus in equities and remaining 35% in debt. You can consider HDFC Prudence Fund among others.
udaya asked, I want to buy a plot in 2012 at Rs. 3.5lakh. How much should i invest per month from now so that I can afford the same.
Sailesh answers,  Hi, assuming a return of 7% on your investments (assuming you invest in bank FDs), you will need to save approx Rs 13600 every month to accumulate a sum of Rs 3.50 lakhs by the year 2012
iftekhar asked, i have 50lakhs where to invest the best secure one
Sailesh answers, Hi, if security of capital is your prime requirement, then you should consider investing your money in bank fixed deposit. You can be assured that your capital will be safe. However, safety comes at cost. You will have to settle for relatively less return as compared to returns from high risk asset class like equity.
raju asked, i want invest in every month at Rs 1000/- which is the best investment option
Sailesh answers, The best way to invest regularly with discipline is to invest systematically. You should start an SIP (Systemcatic Investment Plan) in 2-3 well manage diversified equity funds. E.g DSP BR Top 100 Equity fund or HDFC Equity Fund.
guest asked, Sir, do you suggest to invest in Birla Sun Life India Reforms Fund
Sailesh answers, Hi, Birla Sunlife Reform Fund is a new fund. In my view there is nothing new in terms of concept that this fund brings to the table. In my view there wouldn't be any value addition to your portfolio if you invest in this fund. I would rather recommend an exisiting fund with a proven track record of 5 years and more. E.g. DSP BlackRock Equity Fund or HDFC Top 200 Fund.
maheshp asked, i am investing in Kotak ULIP plan on monthly. Is this right investment for long terms
Sailesh answers, hi, I do not recommend ULIPs. ULIPs combine insurance with investments. A large portion of your premium is invested in to equity/ debt depending on the plan you have opted for. ULIPs lose on the expenses charge in the first few years which are very high. This makes it very difficult for ULIPs to make money over the first 7-8 years, assuming a steady growing stock market. Also, when it comes to investments it is necessary to have a diversified portfolio of stocks, mutual funds, fixed deposits and gold. Banking on ULIPs to help you achieve your financial goal is not a prudent investment approach. Keep your investment and insurance separate. For investments stocks, mutual funds, Gold ETFs and Fixed Deposits are the best. For insurance, Term Plans are the best. Of course, don't forget to ask the commission paid to insurance advisors for ULIPs.
sameer asked, i am 35.want to take a pension plan.can you pls suggest?
Sailesh answers, hi, if you are planning to take a pension plan then my answer to you would be NO. Pension plans are not the solution to plan for one's retirement. You need to have a retirement plan in place which will tell you how much income you will need year on year post retirement taking into account your desired lifestyle and inflation. Accodingly you will have to build the necessary corpus that can generate the required income.
RAVICHANDRAN asked, sir, i invested in Post office recoring for 5 years whether i can get income tax benefit on this?
Sailesh answers, hi, there is no tax benefit for investing in post office recurring deposit.
blueinc101 asked, have an SIP of 3000 each in BSL tax relief and SUNDARANM BNP Tax saver since last 2 years. Should i exit after 1 year or should continue investing?
Sailesh answers, hi, conitnue hoding on to your investments.Both the funds have delivered consistent returns.
Satya asked, Hai Sailesh, Which sectors going forward do you see doing well as far as equities are concerned...Banking, Pharma .. I entered the Mutual Fund market in 2007 when the markets were peaking consequenly I am making good amount of Loss...what do you suggest...re-invest or pull out. I am invested in ELSS mostly like SBI Magnum, BSL 96 etc
Sailesh answers, hi, when i comes to investment in equity, I rely on equity funds. I consider diversified equity funds as the best vehicle to benefit from the gorwth in sectors that look promsiing from future perspective. I would rather leave the job of sector selection to a professional and experienced fund manager. I would recommend that you redeem your investment in SBI Magnum taxgain. Invest for the long term
amit naskar asked,  have a SIP of 1000/- in Reliance Banking Fund dividend should I increase the amount. would it be a good if I diversify in another fund. Please advise
Sailesh answers, hi, I would recommend that you switch to a large cap biased diversified equiy fund like Reliance Vision Fund. Banking sector fund will do well as long as the banking sector does well. Once the sector goes out of flavour your fund will undrprform substantally. You will not be able to time the entry into and exit from the sector. Hence, my advice to move to a diversified fund which will have some exposure to banking sector if the sector looks promising from future point of view.
muralidharan asked, i want to start day trading. Presently, i have rs.5 lacs with me. pls guide me
Sailesh answers, hi, is this sum of Rs 5 lakhs your play money? are you willing to lose 80% of this money? If the answer to both these questions is YES still I would not recommend day trading to any investor. Its an addiction which can ultimately prove disastrous. I would encourage you to invest in equity for the long term.
sriram asked, I have a SIP of 2000/- in HDFC Prudence fund should I increase the amount. would it be a good if I diversify in another fund. Please advise
Sailesh answers, hi, i would recommend that you diversify your portfolio by starting SIP in some other funds.
Satya asked, I have a Home Loan of 5 Lacs for which I am paying 4935 around at 12% to ICICI. I have around 6-7 L in Savings account. Should I countinue with the Loan or replay it. I have around 3-4L invested in Share Market.
Sailesh answers, hi, if you can part with the savings of 6/7 lakhs then by all menas go ahead and prepay your housing loan. I am a firm believer of the fact that one should have minimum or zeor debt in one's portfolio. This will bring down your EMI. This will mean improved cash flow which can then be channelised into starting SIP in 4-5 diversified equity funds.
ps asked, hi..i have a SIP in Reliance Vision fund for one year...should i continue or not ?
Sailesh answers, hi, continue with your SIP in Reliance Vision Fund.
srikant asked, hi....i am srikant.....i am wrking as a process engineer & i want to know about investing in share markets..also i had taken a few shares wen the market was up and since the market has fallen..please sugeest me wat to do?
Sailesh answers, hi, if you are not able to track the stock market and keep a tab on the development of the company whose stocks you have bought, I would advise you to shift your investmens to equity funds. let the fund manager manage your money. you can focus on your job and other things that you like.
Tushar asked, Hello Sailesh, Need to have 1 c in my pocket after 15 yrs. Where do I invest & how much.
Sailesh answers, hi, assuming that your investment earns you an average return of 10% p.a. over the next 15 years, you will hahe to invest a sum of Rs 24,000 aprox every month beginning today. You can invest in a mix of equity and debt in the ratio 50:50
debdipta asked, I am 33 years Old , I planning a SIP investment of 30000/month on 3 mutual funds( 10000 each) . The Mutual Funds are: 1. HDFC top 200 2. Sundaram Smile 3. Reliance Regular Saving Is the Fund selection correct?
Sailesh answers, hi, I would adivse you to add 2 more funds. Have total 5 funds in the portfolio. I would suggest Sundaram Select Midcap instead of SMILE. Reliance Regualr Saving can be replaced with Fidelity Equity. Add Franklin India Bluechip and DSP BR Top 100 Equity Fund
nkumar asked, has the index bottomed out for sure, or is there anymore scope for it to do so.is
this the right time to invest in equities. n what are the hot equities as on now?
Sailesh answers, hi, whether the index has bottomed out or not will be known only in the hindsight. I can say for sure that valuations are more attractive now than they were 2-3 months back. the 4th quarter results are out and most of the companis have delivered better than expected results. The only factor that the market would keenly await is monsoon, If the monsoon is normal, stock markets will defintely move up. European debt crisis is an opportunity to invest.
Abhiram asked, Sir, I have taken a Unit linked pension plan for my father in HDFC SLIC with a premium of 100,000 per annum. I have paid 3 premiums till now. I doubt is it worth to pay further premiums. Please advise if I can continue with the plan or surrender it. My idea is to get steady pension (monthly) for my father within next 5 years. Please advise a better option to get it along with insurance coverage (if possible). Thanks in advance.
Sailesh answers, hi, pay your premiums. According to me ULIPs take 7-8 years to break even. This is because of the high initial cost in the first 3 years. I would recommend that you invest some money in equity funds also. 5 years is a lonng enough for investment in equity funds. Also, please check what is the monthly pension you are looking at and do you have adequate savings to build the required corpus to genrate the same.
kl asked, for tax saving ELSS how is DSP BLACKROCK TAX SAVER
Sailesh answers, hi, DSP BR Tax Saver has done well. you can invest in the same. you can also consider funds like Franklin India Taxshield and Fidelity Tax Advantage among others.
pknegi asked, hi sailesh, i m investing 1000 each every month through sip in hdfc tax saver, hdfc top200, hdfc equity, canrebeco taxsaver, icici discovery, sundram select midcap, reliance regular saving equity fund . How is my portfolio??
Sailesh answers, hi, you have a good portfolio. continue with your SIPs throug the ups and downs of the market. I am sure over the next 15-20 years you would definitely build wealth for yourself.
vivek asked,  Hi I want to invest in Gold ETF, please suggest me how it works and which is the best Etf to invest in ?
Sailesh answers, 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.
jado06 asked, Hello sir, I need to invest for my daughters, their education and marraige.What do you suggest?
Sailesh answers, hi, you need to build a separate fund for each exepense. Hence, you should build a separate portfolio for them. Invest regularly in equity funds through the SIP. take help of a professional investment planner to help you with the investment plan which will tell you how much you need to invest for each such goal on a monthly/annual basis.
Jyothi asked, I had invested in FTI Prima fund via SIP for 3 years (2005 - 2007). I have not redeemed my investment, though the fund has been laggard for quite a while now. Currently i might have just broke even and have my capital safe, but hardly made any profits. What do you suggest I do with the fund? I also have additional on going monthly SIPs in HDFC Top 200 (Rs 5000) and Reliance Vision (Rs 1500). Do I redeem from FTI Prima and invest in these funds? Please also suggest a good Tax saving fund for long term.
Sailesh answers, hi, Franklin Prima is a midcap fund. Midcaps tend to be more volatile compared to large caps. Hence, it is better to switch to a fund that can invest in a mix of both large and midcap stocks. you should switch to Franklin India Prima Plus. For tax saving Fidelity Tax Advantage is a good option.
ltte asked, What is your view on gold ETF? can we still enter at current level?
Sailesh answers, hi, whenever gold corrects by Rs 500-600 invest. Dont rush in to buy gold. the financial world is still in a mess. It will take few years for it to come out of it. Till then gold will continue doing well. Invest in gold slowly and gradually. Consider it as an insurance in your portfolio. Dont go overboard. A 10% exposure is considered good enough.
Dheeman asked, Sir, I am currently invested in SBI Magnum Tax (2000 pm)deividend Gain and ICICI Prudential tax plan dividend (3000 pm) as SIP. Should I COntinue these 2 funds fora 15 year term. What might be the expected annulaized returns from these 2 funds?
Sailesh answers, hi, both these funds have not been a consistent performers. I would not advise any further investment in these funds. you can consider Franklin India Taxshield and Fidelity Tax Advantage Fund.
Haris asked, I have PO MIS for 5Lac as joint account with my wife(house wife) am I liable to declare this for Tax or there is some way to skip we have the PO saving account to jointly in which the intrest is deposited everymonth.
Sailesh answers, hi, is PMIS your only investment? If yes then your annual income is Rs 40,000. Since it is way below the basic exemption limit of Rs 1.60 lakhs, you dont have to pay any tax on the same. It is not even necessary for you to file the income tax return though it would be advisable that you file it every year.
avi asked, What are these Highest NAV in 7 - 8 years funds which have come into the market . Are they any good ?
Sailesh answers, hi, these are ULIPs and hence not recommneded.
manik asked, I have a few GBP(British Punds) with me.I donot want to exchange it to Rs now since the exchange value is very low now.Is there a way that I can invest this money as pound itself in the market.Please suggest
Sailesh answers, hi, if you are investing in India then you will have to invest in the local currency i.e Indian Rupee
rupeshji asked, hello sir. I am 31 years of age. I have two daughters of 4.5 yrs and 1.5 yrs. My salary after tax is 2 lakhs per month. I have my own house and dont have any debt. i can save 1 lakkh per month. please advice how do i invest to take out maximum when i am 50 years of age.
Sailesh answers, hi, according to me you should get a comprehensive financial plan (CFP) made for yourself. The plan will tell you how much you need to save on a regular basis to reach the goals that you have set for yourself. Rs One lakh per month is a large sum to invest every month. Please plan it well.
prashant asked, hi I have invested 15ooo in Reliance Pharma Fund-growth one year before. now i have the profit of 4000. now should i wait for more profit or to sell it
Sailesh answers, hi, since you have a profit go ahead and redeem your investment. Invest the sale proceeds in well managed diversified equity funds like Franklin India Bluechip Fund or DSP Top 100 Equity Fund.
praveen asked, Hi Sir, I want to open a demat account for buying gold ETFs. I wont be trading stocks. So which broker i should open DEMAT account. It should have low maintainence cost.
Sailesh answers, hi, you can go to any bank and open a demat account. According to me the charges are more or less the same for all the banks.
teja asked, Hi, I am 26 and have an education loan of Rs. 5 lacs.. Emi of approx 14000. I earn 25000 Can youpls.. suggest any good investment plan... I also dont have any kind of insurance.....
Sailesh answers, hi, you will have to manage your expenses very well to ensure that you have adequate savings after paying the EMIs. My advise to you would be to start an SIP in 2-3 equity funds.
Preeti asked, Should I enter into the equity/mutual fund market now or wait. Will there be a further dip in the market
Sailesh answers, hi, the best strategy would be to invest 25% of your surplsu now and wait for few days to see how the markets shape up. If they go down further, invest another 25%. Dont wait and time the marekt to perfection. You will not be able to do it, no one has been able to do it!
Satya asked, How to sell non dematerialised MFs, I do not have any certificate also...I only have the Folio number...is it enough and how to go about it?
Sailesh answers, hi, only ETFs are in demat forms. Rest all the mutual funds are held in physical form. To redeem your units you will have to fill up the redemption form that comes along with the account statement. you can download the same from the mutual fund's webstite.
Nishant asked, My savings are 15000 a month..also I am planning to buy a house next yr...how should I invest this amount so that I can have initial amount to buy a house worth 35 lac on loan..pls advice
Sailesh answers, hi, whatever you can save every month should be put away separately into a bank FD or liquid funds. Dont invest this money in equity funds. I am not sure how much this will add up. Whatever the deficit, you will have to fund it with the home loan.
rams asked, Hi Sir,Good Afternoon,how to smartly invest and become rich in these volatile markets
Sailesh answers, hi, I can suggest only one simple appraoch. Start SIPs in 4-5 well managed diversified equity funds. Invest for long term (15-20 years) . Invest through the ups and downs. I am sure you will grow 'rich'
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.