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Rediff.com  » Business » How to earn a second income

How to earn a second income

July 31, 2009 09:16 IST

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

Sailesh says, Goodafternoon everyone, lets start the chat session
rites asked, hi, shailesh my salry is 9000/-pm i can save 4 to 5k p.m. which saving plan is best for me pls suggest
Sailesh answers,  at 2009-07-29 12:22:20Hi, I would advise that you invest your monthly savings in line with your investment goals and risk appetite. For e.g your investment goal can be retirement and if retirement is 10-15 years away then majority of your savings can be invested in equities and the balance in debt
qwerty asked, how is franklin felxicap ? should we exit and enter franklin bluechip
Sailesh answers, Hi, Franklin Flexicap can invest across stocks with any market cap as agains Bluechip which can invest only in large cap stocks. If you are willing to take risk of investing in large and midcap stocks then Flexicap is ideal or else switch to Bluechip Fund
qwerty asked, sir i am in mid 30's and wish to invest in mutual funds . i have read about investement in index funds and etfs . what are these and how are they better than active funds. are they worth investement and what proportion of my amount should i invest . if recommended which are the ones which are recommended .
Sailesh answers, hi, index fund invest in stocks that constitute the underlying index and in the same proportion. The fund manager has no choice to invest in stock other than those that form a part of the index. Hence it is known as a passive style of management and the expenses are low compared to actively managed funds. In India, non-index based diversified equity funds have outperformed the popular index like Sensex and Nifty. Hence, if you are considering investing in index funds do not allocate more than 20% of your overall equity portfolio to these type of funds
dfdd asked, Is there any income tax obligation for long term investments (more than 1 year) in stocks or mutual funds? What percentage of the returns would be taxed? What if I have a loss on the investments?
Sailesh answers, hi, if you are investing in equity and balanced funds then there is no long term capital gains tax if the investments are redeemed after one year. In the case of debt funds, the long term capital gains tax would apply. It will be 10% without indexation and 20% with indexation whichever is lower. If there is a long term loss on equity funds then the same cannot be adjusted against the long term capital gains. In the case of Long term capital gains from debt funds, the long term loss can be set off against long term gains
qwerty asked, query on sips - irrespective of the fact that an sip is started earlier to august 09 , will entry load be deducted ? if so why as each sip is treated as a fresh purchase . please give ur opinion .
Sailesh answers, hi, the SEBI circular says that all equity oriented fund SIPs registered prior to 1st August 2009 will be charge entry loads till the last instalment is invested. In other words,all SIPs registered after 1st August will be not be charged any entry load
123 asked, hi, I there any plan to invest Rs. 5000/month for 15-20 years to get better returns.
Sailesh answers, hi, for investment horizon of 15 years equities are the best investment opiton. However, you should keep in mind that stock markets are volatile and equity investments carry maximum risk. The longer you stay invested the higher the chances that you will make goo returns
sandeep asked, Is it good to go for term insurance for financial security? which plan is best and exact amount to go for at age of 30 with one child?
Sailesh answers, hi, as far as insurance is concerned the ideal option is term plan. Do not go for endowment, money back or ULIPs. Term plan offer only risk cover and you get the benefit of higher sum assured for lower premium. I would adivse you to calculate your human life value (HLV) and then decide the sum assured for your term plan. To calculate your HLV you can click the following link: http://www.personalfn.com/calc/hlv.html
tst asked, Hi sir, what about Rel infrastructure fund and DSP ML world power fund(NFO)
Sailesh answers, hi, these are thematic funds that offer higher return for higher risk. The fund is dependent on the performance of the sectors that form the theme. The fund manager does not have the flexibility to invest in sectors that do not form a part of the theme. In a situation where the underlying sectors are not doing well the fund manager has no choicd but to stay invested in the same. Hence, investors who are sure of the future performance of the sector and who can time their entry into and exit form the sector can consider investing in these funds. It is better to look at diversified equity funds that can invest in any sector that the fund manager finds attrative from returns point of view.
narah asked, Sailesh, Are all ULIPs bad according to you?
Sailesh answers, hi, ULIPs charge are high for the first 3 years. In a normal scenario the it take at least 10 years for the ULIPs to recover the initial costs. Consider a combination of term plan and mutual funds over the ULIPs
beakrishnan asked, i am a retired personal and have something atlast to invest- FDs rates are very marginal now a days. I am not interested in investing in risky stock market - can you advise me suitably as to where can i invest this little sum of mine?
Sailesh answers, Dear Sir, it is true that interest rates are low and the options are few. You can consider investing in Senior Citizens scheme that offers 9%. The maximum investment in this scheme can be upto 15 lakhs. Bank Fds are the next option to choose from.
LAKSHMINARAYANAN asked, Which diversified fund can be invested now for monthly SIP for Rs.2000/- each for 3 MF and time horizon of 10 years
Sailesh answers, hi, you can consider investing in funds like Franklin India Bluechip, HDFC Equity and DSP BR Top 100 Equity Fund among others
Pari asked, How abt investing 1 lac in short term and then keeping rotating this money in the market in stokcs?
Sailesh answers, hi, I would not recommend equity investment for investment horizon less than 3 years. While it make seem easy to make money from stock market while the going is good do not forget the fact that equities investments carry maximum risk. A stock can fall 20% in one day and if it is because the company's fundamentals are bad the loss could be permanent. Hence invest in good company shares with long term horizon of atleast 3 years
Rajeev Sharma asked, Hi Sailesh, Can you throw some light on taxation related to short term and long term gains on both equity and debt funds. Also, I have about 6 months expenses as a contingency fund of about 6 lakhs - all in Bank FDs. Given the low interest which they are fetching does it make sense to move them over to debt mutual funds. Thanks for your answer.
Sailesh answers, hi, i have discussed the taxation of mutual funds earlier in this chat. Regarding moving money from FD to debt funds, you need to understand that while FDs offer fixed assured returns debt fund returns are market linked. Technically speaking debt funds can give negative returns if the interest rates in the economy move up. Given today's economic scenario and the fact that its your contingency fund, I would not advise you move out of FD
Mani asked, Dear sir, what will happen if we stay invested for long years (say 20 years , 15 years..) in a mutual fund? eg a amount of rs 10000 in a good mutual fund for that many years. Is that a good strategy.
Sailesh answers, hi, yes 15 years is a good time for investing in equities. If you invest Rs. 10,000 in equities for 15 years and if you money grows at the rate of 15% p.a. over 15 years, your investment of Rs. 10,000 will grow to Rs.80,000 (approx). Yes, its a good idea to invest in equities for 15 years but do not forget that your investment is in line with your asset allocation and risk appetite
raj asked, Sir, for my 2 yr old son what do u suggest a MF with SIP or insurance as i dont want returns till 18 yrs. I already have his Max new york life insurance, savings a/c , kids a/c &FDs
Sailesh answers, hi, to plan for your child's future expenditure like higher education / marriage, get an investment plan made. The investment plan will help you decide how much money you will need after 18 years, how much should you invest every month and which products so that you have the right amount of money at the right time.
GetMore asked, I m a 44 yr old, can save max 5 k per month, interested in retirement solutions, but return on pension scheme is very nominal. Planning to invest in MF for approx 14 yrs. Your Opinion required
Sailesh answers, hi, in my view pension plans are expnesive and may not be the ideal way to plan for retirement. I would suggest that you take help of a financial advisor to get a retirement plan made for you and then invest in line with your retirement plan
abhi asked, Please rate these NFO, I want to invest either of them through SIP for 3 years 1. JPMorgan JF Greater China Equity Offshore Fund 2. DSP BlackRock World Energy Fund 3. Canara Robeco F.O.R.C.E Fund 4. Kotak Select Focus Fund Please suggest Thanks Abhishek
Sailesh answers, hi, in my view your portfolio is not very healthy. You have all the thematic funds in your portfolio. I would recommend that you redeem you entire portfolio and invest in well managed diversified equity funds with a track record of atleast 5 years.
narah asked, Shailesh, Your point about ULIPs is good, in fact I also planned to invest in term plans and MFs for future. However I have already invested around 1.5 lakhs in ULIPs over the last 3 years. Should I close all those and invest in MFs and equities and take a good term plan?
Sailesh answers, hi, After your mandatory investment of 3 years, do not pay further premium. Rather invest in mutual funds.
madanchikna asked, Hi Sailesh, I am a salaried person having monthly intake of 60k after cutting taxes . I want to buy one 2BHK of cost around 30L ,where to invest my money and how to invest? can u please guide me .. thnx in advance
Sailesh answers, hi, The selection of investment option will depend on when you need the money i.e no of years to buying your property. If your investment period is less than 3 years, fixed income instruments like FDs will be the ideal. In your case capital preservation is important compared to returns.
investor asked,  I have a certain lumpsum amount for which I need capital protection. Is it a good idea to invest lumpsum in debt oriented MIP and invest the monthly income in good equity diversified funds? If not can you suggest a better alternative?
Sailesh answers, hi, sounds like a good idea. I would recommend that you opt for quarterly dividends as agianst monthly in case of MIPs
MyMoney asked, Please sugget some tips on how to select a Pension fund. I can invest around 35-40K per year. Is LIC worth looking at?
Sailesh answers, hi, Pension plans help you meet your post retirement needs. It is important to have a retirement plan in place before taking any pension plan. In my view, invest in a mix of equity funds and debt rather than taking a pension plan.Build a retirment corpus adequate enough to generate regular income every year post retirement
tst asked, Sir I invested in following MF through SIP. Pls suggest can continue same for long term DSP BR TIGER, HDFC growth, Sundaram Select focus, DSP ML Equity growth.
Sailesh answers, hi, you have a good portfolio of mutual fund schemes.Continue with your SIPs.
subrat asked, I am a salaried employee, i am planning to buy a home but only after 3 years. What kind of investments do you think will be suitable for me so that I can use the money saved for my home but at the same time not let the money lie around idle.I can save about 10 to 15 thousand per month
Sailesh answers, in my view you can consider investing in MIPs from mutual funds. HDFC MIP - Long Term is among the better performing MIPs
shk asked, hi i am self employed person monthly i can save between 5000 to 10000 i have 2 kids i want to save for there future where and how should i invest plz ans me hi i am self employed person monthly i can save between 5000 to 10000 i have 2 kids i want to save for there future where and how should i invest plz ans me hi i am self employed person monthly i can save between 5000 to 10000 i have 2 kids i want to save for there future where and how should i invest plz ans me
Sailesh answers, hi, the answer to your question lies in making an comprehensive investment plan made for you. The investment plan will precisely tell you how much to invest for each financial goal and in which ivestment instrument
abhinavs asked, do u think for starters SIP would stand out to be amongst a few good options to invest...???
Sailesh answers, hi, yes for investors begining to invest for the first time, SIPs are the best way of investing. Build a portfolio of well managed funds with track record of atleast 3-5 years to show for
Sailesh says, Thank you all for participating in the chat session. If you have any further queries, please feel free to mail me at: info@personalfn.com