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Never borrow money to invest

November 11, 2009 14:11 IST

InvestmentsAre 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


Puneet Kumar asked, Hi I have 1 lac to invest for 6 months, which are the best sector for this time period.
Sailesh answers,  at 2009-11-11 12:58:06hi, my advice would not to risk your money if your investment horizon is 6 months. Invest in a liquid fund or a bank fd instead. For high risk investment like equity my view is that your investment horizon should be atleast 3 years
ravi asked, i am new to share buying thro online and i have opened account with sharekhan recently. Please advice me, how to deal the shares online.
Sailesh answers, hi, I would request yout to get in touch with the product team for help on online share trading. My advice to you would be to stay away from day trading and use the facility only to buy and sell as and when required. Online trading can get too tempting especailly when the markets are in bull phase and everything is moving up
vinita asked, hi Sailesh I have been investing MF (SIP) since 2006 in Frankling Blue Chip, SBI Tax Gain, ICICI Pru Infra G, HDFC TOP 100, DSP BR Top 100, Rs.1000 each per month. Alongwith insurance POlicy Rs.18000 Annual (ICICI Pru life 2 Lac), Rs.1024/Month (LIC 1+2 Lac), Term Insurance 5 Lac each for myself and husband. My purpose is Child education, Retirement, repayment of Home Loan, Please suggest whether it is sufficient or need more to invest, also advise this portfolio is OK for long term investment?
Sailesh answers, hi, it will be difficult to give a view on the breif description you have put up. I will have to get more details from you to answer your question. Request you to write to me separately at info@personalfn.com with more details
sanjeev asked, I want to invest in MF. Please advice the best funds available for lond term 3-4 years view
Sailesh answers, hi, i can give you the names of 2 funds in each category - HDFC Top 200 fund and Franklin India Bluechip Fund, among the balanced funds you can invest in HDFC Prudence Fund and DSP BR Balanced,
vinay asked, Is it advisable to take laon and invest in shares?
Sailesh answers, hi , in my view this is the biggest fundamental mistake any investor can make - to borrow money and invest. The best way is to save some money out of your regular income and invest into a mix of equity, debt and gold based on your investment horizon, risk appetite
Saravanan asked, hi putting fixed deposit is really worth or i have to do something else?
Sailesh answers, hi, it always pays to have a balanced portfolio that consists of equity, gold, debt and property. While it may not be possible for every investor to invest in property, it is relatively simpler to invest in equity, debt and gold through the mutual funds. Investing only into fixed desposits means that your expected returns will not keep pace with inflation and hence you risk losing your capital over a period of time. Invest a small portion of your savings in equity so that your portfolio retruns are more than the inflation
1234 asked, PLEASE GUIDE; HOW MUCH % OF YOUR MONEY SHOULD BE INVESTED IN WHICH BUCKET (eg: real estate, health insurance, stocks, gold, savings account etc)
Sailesh answers, hi, there is no witttenr rule for deciding an asset allocation for any investor. It will vary on the basis of age, risk profile and investment horizon. As a thum rule 100 minus your age should be in equity and the balance can be allocated to gold and debt. Investmnt in gold should be 10%. Always keep aside 5% of your total portfolio in liquid funds/bank to meet any contingency. Ideally a contingencty fund should be equal to 6 months or more of your regualar and fixed expenses
modink asked,  I have taken term plan of Rs. 30L,SIP in BSL Frontline equity,BSL infra fund @1500/-pm each, HDFC TOP200 2500/-PM, ELSS SBIMTAXGAIN 28500/-, BSLTAXRELIEF41300/-,HDFC Midcap Opportunity Fund Rs.10000/- and Morgan Stanley ACE Fund 10000/-. Whether the portfolio is ok. I want to invest further 5000/-PM Kindly suggest considering the current portfolio.and also name some good liquid funds.
Sailesh answers, hi, priam facie your portfolio doent look very healthy. You have solid funds in HDFC Top 200 and Birla Frontline Equity. Other funds are average. While selecting funds ensure that they are well diversified and have a proven track record of atleast 5 years. I would opt for Sundaram Select Midcap against HDFC Midcap
hi asked, I WANT TO INVEST 1 LACS WHAT IS THE BEST OPTION FOR SHORT TERM 2 MONTHS
Sailesh answers, hi, the best option for 2 months is liquid funds.
vb asked, Hello Sir,I am 26 yrs old & having 3 kinds of loan - house, car & land (personal loan) already, is it safe to have such loans ?
Sailesh answers, hi, I dont believe in loans. Having said that I know that it is necessary at times to borrow money to buy house. I would rathar accumualate money to fund my asset like car. Again, if there is a contingency and you are really short of cash then personal loan can be resorted to but not to fund any consumer durable like refrigerator etc
hasnain ali asked, I want to Invest rs 4000 /- in MF via SIP. time horizon 3-5 years. Pls suggest MF & min. expected returns annualy.
Sailesh answers, hi, its good to note that your investment horizon is 3-5 years. If you continue to invest in equity funds via the SIPs over the next 5 years I am sure you will buidl wealth for yourself. For equity you can target return of 15% p.a. Anything above this is a bonus! TO build wealth ensure that your invest in the right funds - invest in well managed diversified equity funds (do not invest in sector / thematic funds)with a proven track record of 5 years to show for
gauri asked, is this the right time to invest in gold etf
Sailesh answers, hi, if you are investing in gold with an investment perspective then you may be little disappoited. gold has run up sharply in the last one month and it is quite possible that it may correct from these levels. Hence, stagger your investments. IF you are buying gold to dieversify your portfolio because you currently to not have gold in your portfolio, I would recommend that you start buying in small quantity every month
arindam asked, Sir, it is an offbeat and off-track question. I am new on investing in MF. Is there any possibility that in a fine morning, AMC can siphon off all money showing NAV Rs. 1 or Rs. 2 just like a cheat fund?
Sailesh answers, hi,there are very strict guidelines from SEBI which mutual funds have to follow. Also funds houses have to disclose their portfolio every month to SEBI, Hence it is very difficult for funds to siphone of the investors'money. Yes, it is possible that the funds may invest in wrong stocks and hence lose money which can have an adverse effect on the fund's NAV
kiranclicks asked, I can afford saving about 3000 per month.. what is the best method to invest ?
Sailesh answers, hi, it is not possible to give you an accurate reply but assuming your investment goal is 10 years away, then you can invest your monthly saving in equity funds. I am assuming that you have already set aside some savings to meet any contingeny.
guru asked, Good Afternoon, Sir. I have started SIP in Birla Frontline Equity, HDFC Top 200, DSPBR Top 100, and Sundaram Select Focus. Now, I want to invest 20-25k lump sum. Where should i invest?
Sailesh answers, hi, all the funds indicated by you are good. Continue your investments in these
XYZABC asked, My wife insists me to buy children and pension insurance policies. But I think instead of going for insurance policies, its better to have good term insurance and then invest in MFs with SIP for next 5-10 years. What you will suggest ?
Sailesh answers, hi, i agree with your view - for insurance term plans are the best as they allow you to go for higher sum assured for very low premium. Pension plans and children plans are not very efficient to meet your retirment and children's education goal. I would rather suggest invest in mutual funds via the SIPs. I am sure with a discipline approach you will be able to meet all the financial goals you have set for yourself and your family
sanonline asked, Hi Sailesh.... I have invested Rs 1,00,000 in JM Emerging Fund - Growth Plan in Feb 2008 & still can hold it for next 6 months... what is your suggestion? should I hold or step out?
Sailesh answers, hi, i would recommend that you exit this fund immediately and invest the proceeds in well diversified eequity funds with a proven track record. HDFC Top 200 and Franklin India Bluechip fund are among the funds that you can consider
gurus asked, suggest me some 2-3 well performing ELSS scheme with an investment horizon of oevr 5 yrs
Sailesh answers, hi, you can consider funds like Franklin India Taxshield and Fidelity Tax Advantage among others
ssm asked, how to invest 2000 every month for a 15 year horizon........
Sailesh answers, hi, the best way to invest on a monthly basis is SIPs. SIPS allow you invest without having to bother about timing the markets. It instill a sense of discipline in the investor and allows him invest across market cycles. Typically investors want to time the markets and in the process end up buying at higher levels and miss out on opportunities when the markets are at rock bottom
Niraj asked, I have just started my job career 7 months back, i have very little money to invest. so where should i start from?
Sailesh answers, hi, invest whatever you can save currently in a mix of equity, debt and gold. Keep an eye on your expenditure and regualarly analyse your spending pattern. Always aim at saving more and then channelise your savings into invesmnets like well managed equity funds, Gold ETFs and bank FDs.
vb asked,  i want to save soem money for my kid, who is 1 yr old. Should i go for LIC,PPF or MF or SIPS ?
Sailesh answers, hi, if you are plannig to build a portfolio of invesments to fund your child's future expenses on education and marriage, then invest in mutual funds via the SIPs. A small portion can be invested in PPF. I will not recommend any insurance policy to meet your child's any future goals
mourya asked, Is investing in liquid and ultra short term fund for short term investment horizon? Please suggest 2 good funds
Sailesh answers, hi, yes, for investment horizon of 3 months and less liquid and ultra short bond funds are the best
npe asked, SIP in DSP BR Equity - Dividend Scheme Rs.1000/- PM .. your say...
Sailesh answers, hi, this is a good fund from long term perspective. One can consider adding to his/her mf portfolio
rajeshlad909 asked, Good Afternoon Sir I like to ask you I did invest in J.M Agri & market is to down so please advise me what to do & if i want to invest in another plan which one is best.
Sailesh answers, hi, exit this funds immediately and invest in funds with proven track record like HDFC Top 200
XYZABC asked, Please suggest 3 MFs to invest via SIP for 10 yrs with a monthly contribution of 10K.
Sailesh answers, hi, HDFC Top 200, Franklin India Bluechip Fund and Sundaram Select Midcap
Subbu asked, Hi, I am 30yrs old - married and just recently blessed with a baby. My current take home is 65K, of which 18K goes for my EMI (Car + Personal Loan). Of the balance, I spend close to 25K on credit card (includes my groceries, fuel, bills etc), 10K on rent. I can save roughly 5K per month. Presently I have an emergency fund with some 50K, and invested in MF for some 30K. I have NSC for 15K and PPF for 20K. How do you think I should proceed from here?
Sailesh answers, hi, the next step is to make a comprehensive investment plan for yourself to meet all the financial goals that you have set for yourself. Typical examples of financial goals include - your retirement, epxenditure on your child's education (graduation and post graduation), buy an asset like house, car ,etc. /the investment plan will guide you in deciding how much of your monthly savings should be invested in which asset i.e equity and debt. Also it will tell you if you will be able to meet all the goals that you have set for yourself. If there is likelihood of any deficit then you can take corrective measure from today itself. You can write to me separately at info@personalfn.com
jatinshahs asked, which is more better - Fixed Deposit, PPF of NSC ?
Sailesh answers, hi, PPF and NSC offer tax benefits. If your objective is tax savings then PPF and NSC are better than an FD. However, if your investment objective is not tax saving, then I would invest in bank FD for not more than one year. Currently banks are offerring 7% for one year while NSC offers 8% for 6 years and PPF 8% for 15 years. Given the fact that interest rates are likely to move by the end of March 2010,I would opt for plain vanila bank FD for one year
Sailesh says, We have run out of time. I thank you all for particiapting in the chat session. If you have any further queries, please send them to me at : info@personalfn.com