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How to invest wisely and become rich

Last updated on: August 13, 2009 09:08 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?

Financial planning expert Sailesh Multani offered some valuable tips during a chat on rediff.com on Wednesday. Here is the transcript:

Sailesh says, 
Goodafternoon everyone, lets start the chat session


ashsrin asked, I want to invest in some SIP's.Can u please suggest some good ones.
Sailesh answers,  at 2009-08-12 12:20:35hi, in the diversified equity fund category you can consider funds like, HDFC Top 200, DSP BR Top 100 and Franklin India Bluechip Fund. In the balanced fund category you can select funds like HDFC prudence and DSP BR Balanced Funds
Sandeep asked, Hi,I work in a private company and earn around 25K a month, i've a 3yr ULIP with MAx new york for 50K per annum....is this sufficient or should i invest in pension plans if so suggest the one which will suit me.
Sailesh answers, hi, since you are looking for a Pension plan, I would recommend that you get a retirement plan made for yourself. I would suggest that you build a portfolio of equity and debt funds rather than opting for pension plans
vrs asked, what is your immediate outlook on debts and Equity
Sailesh answers, hi, the equity markets have been in the correction mode for sometime now. This is mainly on account of poor monsoons. I believe that this will impact our GDP growth to some extent but India will still clock a growth rate of 6%. Hence, the current correction should be used as an opportunity to invest further. As far debt markets are concerned, the 10-yr yields have been inching up and now close to 7.10%. In my view you should not invest in long term income / g-sec funds for the time being. Maybe when the yields touch 7.50% you can consider investing in income / G-sec funds. As an alternative to debt funds,you can consider investing in fixed deposits which fetch you assured returns
pankaj asked, Hi I have surplus of Rs 100000 for about 6 months, which are good MF for shortterm investement.
Sailesh answers, hi, in my view you should consider parking your funds in liquid / liquid plus funds
bjbbjnj asked, How is Post Office MIS...Is it good to invest in today's market?
Sailesh answers, hi, Post Office Monthly Income Scheme (POMIS) is a debt investment and fetches 8% p.a. on a monthly basis. If you are looking forward to investing in risk free assured income instrument then POMIS is a good option. The interest from POMIS is charged to tax and if you fall in the highest tax bracket then POMIS may not be very attractive from returns point of view
ghoshsukh asked, What is the logic behind contra funds (e.g. UTI contr, ABN AMRO future leader etc.)? Why they have done bad in Indian market?
Sailesh answers, hi, contra funds invest in sectors / stocks which are currently out of flavour with the market trends. A particular sector may be under performing for technical reasons but may be fundamentally strong. A contra fund manager is always on the look out for such opportunities and tries to make returns when the sector is back into the reckoning. Contra funds havent done well mainly because they are managed like any other diversified funds. I cant think of any true contra fund in the industry that can really add value to investor's portfolio
rejo asked, hi sailesh,can u suggest some mf which can be covered under 80cc for tax saving
Sailesh answers, hi, for tax savings you can consider funds like Franklin India Taxshield and Fidelity Tax Advntage Fund
awes asked, dear sailesh , my core holdings are dsp top 100 , hdfc top 200, birla sunlife frontline equity , the sectoral exposures are dsp tiger , relicnae diversified fund , midcap holding are reliance growth and franklin flexicap, losses in franklin flexicap , please suggest any changes to the portfolio ,want to invest for long time , can i look at banking funds or any other core holding that you may suggest.
Sailesh answers, hi, in my view you have a very good portfolio of mutual funds. I dont recommend any changes to the portfolio. You can continue investing in the exisitng schemes.I would not recommend a banking sector fund because its a sectoral fund and the performance of the fund will be linked directly to the perfomance of the secotr as a whole.
KAUSHIK asked, IS PENSION FUND A GOOD OPTION OR SIP/PPF, SUGGEST ME?????
Sailesh answers, hi, in my view pension plans are not very efficient. Instead you should get a reitrement plan made for yourself in invest according to it. It always pays to have a diversified portfolio comprising of all the asset classes like equity, dbet, gold and real estate.
vivek asked, Good Morning Sailesh !!!how to distribute Rs 10000 per month saving to get maximum benefit?
Sailesh answers, hi, if you are long term investor with investment horizon of 4-5 years and willing to take risk then equity funds are the best option for you. You can break up the amount of Rs. 10,000 into 4 parts and invest via SIP into 4 equity funds. Make sure that you invest in well managed diversified equity funds with a track reocrd of atleast 5 years to show for.
KJ asked, Hi Shailesh, Would like to invest in MF for 3-5 yrs span, monthly maximum 2000. Can you please suggest atleast 2 MFs to consider, Also Debt or Equity ? Less Risk,
Sailesh answers, hi, you can condier funds like HDFC Top 200 and DSP BR Top 100 Equity. Since your investment horizon is 3-5 years equity funds are ideal for you. However, please keep in mind that equity funds carry maximum risk. If you want low risk then invest in MIPS that have 25% exposure to equities and balance 75% is invested in debt
smbhat asked, What is your advice to save tax? ULIP or ELSS? I have been adviced to invest in ICICI Prudential RICH fund(A ULIP0. My goals are long term. I was inclined to invest in Fidelity tax advantage.
Sailesh answers, hi, in my view for tax saving there are 2 good options - PPF and ELSS. ULIPs in my view have very high initial cost and not the ideal insurance. It combines insurance with investments. My view is that bot these should be separate. As far as insutrance is concerned, Term plans are the best. They offer you higher Sum Assured for ver low premiums
sdfsf asked, In ELSS fund investment what is best approach SIP or partly lumsum ?
Sailesh answers, hi, you can follow either of the 2 strategies. If you have lumpsum you can stagger into 3 parts and invest accordingly. If you have monthly savings, then SIPs are good way of investing
Avi asked, Hi I want to know the option of investing in gold through banks
Sailesh answers, hi, the best way of investing in gold is to buy the units of Gold ETFs. ETFs provide the ease of buying and selling of units as and when required. The units can be trade on the NSE. Gold sold by banks is expensive by atleast 4-5% and banks dont guarantee repurchase of the same. Hence, if you bought gold at low levels and make goo profits, you may find it difficult to sell the physical gold bought from bankers. In my view dont buy gold in physical form at all. Gold ETFs are the best way of investing in gold
RAJA asked, Extension of PPF account, after 15 yrs, is possible or not ?
Sailesh answers, hi, yes PPF account can be extended by 5 years after the initial maturity period of 15 years. This facility is not avaialble to NRIs who have a PPF account and which has completed 15 years
deepak asked, hello sir i m a businessman i hv 10 lakhs free from last 2 years where i can invest such a big amount to get safe returns without risk
Sailesh answers, hi, in my view bank FDs are ideal for you. There is no scope of capital erosion and the returns are fixed and assured.
pravin123 asked, Hi Out of my take home I left with 25k per month. I can bear a high risk portfolio. What do you suggest? Where should I invest? How good it is to play in Option trading?
Sailesh answers, hi, in my view you should get a comprehensive investment plan made for you for your various financial goals. You can then invest you monthly savings of Rs. 25,000 as per the plan. The plan will tell you precisely you how much of Rs. 25,000 should be invested in various asset classes like equity,debt and gold. Option trading is not advisable at all
kamol asked, hello Sailesh, is the following portfolio good - DSRBR Top 100, Reliace GWTH, SUNDRAM SELECE FOCUS GWTH, SUNDRAM SELECT MIDCAP< SBI MAGNUM CONTRA< HDFC GWTH. Pl advice thnaks
Sailesh answers, hi, avoid SBI Magnum Contra. Rest all are good funds
Neetam asked, Sir want to know about safe investements other than bank FD's which are easily withdrawable in times of need
Sailesh answers, hi, you can consider investing in liquid funds. Liquid funds are very low risk debt funds with no entry or exit loads. The money can be liquidated in 24 hours
niren asked, my wife has accumulated cash money over few years in terms of gifts on festivals and other religious rituals. She is a housewife and does not pay any tax. Can she now invest money ...she has gor approx 4-5 lakh rupees with her.
Sailesh answers, hi, yes she can start investing in mutual funds and bank deposits.It is important for her to have the Income Tax Pemanent Account Number (PAN) to start the investments. Invest with care and as per your risk appetite. have a good combination of equity and debt. Consider investing in equity funds and bank FDs
mathews asked, Dear Sailesh, i had taken a loan of 12 lacs&bought a flat worth 14 lacs 18 months ago.If i sell it for 18 lacs today,what would be the tax liability on me.Regds
Sailesh answers, hi, the difference of 4 lacs (18-14) will be your short term capital gains and you will be charged to tax as per the income tax slabs
SWAMY asked, HOW TO INVEST MONTHLY FOR MF AND WHICH PLAN IS USEFUL
Sailesh answers, hi, you can invest in mutual funds via the Systematic Investment Plan (SIP) In this case a specified sum of money is invested in a specified scheme on a specified date. SIP is considered to be the best way of investing in equity funds as it helps you average your buy price over the long term.
Tapan asked, Hi Sailesh, I am 33 yrs old, currently I am investing 1.4 lacs/anum from last 5 yrs. 1. 6000/- monthly in HDFC Young star plus. Tenure = 15 yrs 2. 4000/- monthly in Metlife [Met Smart Plus(A Whole Life Unit Linked Insurance Policy) ]. Tenure= 15 yrs 3. 20,000/- yearly in Kothak Mohindra life insurance. Can you give me an idea whether my investmens are on right track or not ?
Sailesh answers, hi, you seem to have a portfolio only of insurance policies. In my view insurance should be taken only to cover the risk in case of any eventuality. As far as investments are concerned i.e if you wish to grow your money then insurance policies like endowment plans and ULIPs are not the right options. You should consider investing in equity funds if you wish to gorw your money.
iahmedb asked, Should i switch my MF investment in magnum tax gain which is due for redemption after 3 yrs lock in period to some other fund or continue with it. I don't any immediate money for atleast 3 more years
Sailesh answers, hi, in my view you should switch from Magnum taxgain after 3 years. If you are not using this money for tax saving purpose then invest in equity funds that are not subject to lock-in period of 3 years. Consider funds like HDFC Top 200 instead
praveeen asked, What are the best debt funds for a period of 5 years
Sailesh answers, hi, you can consider funds like HDFC income fund and ICICI PRU Income plan
Ramsastry asked, I have ICICI smartkid and Lifetime gold plans with 50000 and 125000 annual premia respectively. I see no growth even after one year. Right they are maintained in protector mode. I have no much knowledge about MFs. People say MFs are best option for money growth. I feel a FD for the same amount would have been much better. Please suggest what i should be doing. Thanks
Sailesh answers, hi, in my view you are not in the right kind of funds. Your objective is to grow your money and for that equity funds are the right choice. Invest in well manged diversifed equity funds with investment horizon of atleast 3-5 years. I am sure you will see your money growing. Please do not expect very high returns like 30-40%. 12-15% average returns over 3-5 years is considered good
ashsrin asked, what percentage should one allocate to equity diversified,balanced and debt funds in that order
Sailesh answers, hi, the answer to your question lies in your investment horizon and risk apetite. Ideally 100 minus your age should be invested in equity and balance in debt. The logic is that when you are young you can take more risk with your money. When you grow in age and nearing retirement then debt should form a majority of your portfolio
Sailesh says, Dear friends, we have run out of time. 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