Rediff.com« Back to articlePrint this article

PPF is the best debt product in India

April 09, 2010 11:32 IST

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

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


vinayakarao asked, whether mutual funds are beneficial or shares, pl let me know
Sailesh answers,  at 2010-04-08 12:55:22Hi, this is a question that many investors ask. A lot of research goes into forming an opinion whether the stock you are buying is trading at an attractive price. According to me for any retail investor who does not have any knowledge of equity investment or access to company related information, the mutual funds are the best way to get an exposure to equity markets. Mutual funds are managed by professional fund managers. Hence, you as an investor do not have to worry about which stock to buy and sell. If you are a beginner, mutual funds are the best for you. Invest in well managed, large cap biased diversified equity funds with a proven track record
ghatge asked, Hello. Is ICICI Prudential Infrastructure Fund ( DIV/R) a good fund. Should I stay invested?
Sailesh answers, Hi, ICICI PRU Infrastructure fund is a thematic fund which invests in sectors that form the infrastructure theme. According to me one's core portfolio should comprise of well managed diversified equity funds with comparatively higher exposure to large cap funds. Sector funds or thematic funds restrict the choice of sectors available for investment to the fund manager. In that case, the performance of the sector/thematic fund hinges upon the performance of the underlying sector or theme. Sector funds do very well and outperform diversified funds when the going is good for the underlying sector. Conversely, the fund's performance takes a greater hit than a diversified fund when the underlying sector falls out of flavour. If at all you want to invest in a sector fund, ensure that your entry into and exit from the fund is well timed. This according to me is impossible to get right all the time. Hence, cap your overall exposure to these funds at 5% of your overall equity exposure.
lll asked, wats the approx returns i can expect in HDFC Cash Managmenet Fund - Savings Plan or Templeton India Treasury Management Account if i invest 50,000 for a period of say less than a year. thx
Sailesh answers, Hi, HDFC Cash Management and Templeton Treasury Management are money market funds implying that the fund manager invests only on money market instrument like call money and treasury bills. The returns of money market funds or liquid funds as they are popularly known as are linked to the return of call money and treasury bills. Current the rate is in the region of 3-3.5%. Hence, the return of any liquid fund will be in the region of 3-3.5%. It is better to invest in these fund for less than a year and opt for dividend reinvestment option.
KUMARI asked,  AM WORKING WOMAN I WANT TO INVEST RS. 1 LAC PLS SUGGEST WHERE SHOULD I INVEST ?
Sailesh answers, hi, it will be very difficult to give you any diea how you should go about investing your Rs 1 lakh. If you are investing for a period of 5 years and more, willing to take risk then equity funds are the ideal. However, at the same time ensure that you are not overly epxosed to equity as an asset class. Divide your investments between equity, debt and gold. The asset allocation is a function of your age, risk taking ability and willingness and investment horizon
swapneel asked, Is PPF is better or MF?
Sailesh answers, hi, PPF is a debt instruement that pays interest @8% p.a. compounded annually. The interest is tax free. This is by far the best debt product in the country. Investmnent upto Rs 70,000 qualifies for deducton under section 80C. MF on the other hand invest in equity and debt. the returns are market linked and hence subject to fluctuations. There is a risk of losing your capital if the markets were to go down. An ideal portfolio should have a combination of both assured return and market linked return instruments.
swapneel asked, Is PPF is better or MF?
Sailesh answers, hi, PPF is a debt instruement that pays interest @8% p.a. compounded annually. The interest is tax free. This is by far the best debt product in the country. Investmnent upto Rs 70,000 qualifies for deducton under section 80C. MF on the other hand invest in equity and debt. the returns are market linked and hence subject to fluctuations. There is a risk of losing your capital if the markets were to go down. An ideal portfolio should have a combination of both assured return and market linked return instruments.
Mani asked, I am planning some investment options in MF for my Father (senior citizen age 68) I got 30k for this year. Could u suggest some funds? is SIP advisable?
Sailesh answers, hi, if you are willing to take risk and invest for more than 5 years then consider equity funds like HDFC Prudence, Franklin India Bluechip and DSP BR Equity. While SIP is a good option, even lumpsum can do
Sripada asked, I have SIP for 15000/month in six MFs (DSPBR top-100, HDFC top-200, Birla frontline, Sundaram Midcap, SBI contra, Franklin Bluechip). I realised that investing in more than 4-5 similar funds is not good. I am looking to diversify my investment. Do you want me exit any of the above and start some MIP or ELSS? If so please suggest which one to exit and which one to consider signing up. Thanks a lot.
Sailesh answers, hi, you have a very good portfolio. In my view it is fairly diversified. Invest in ELSS only if you want to save tax. For the sake of diversification do not invest in ELSS. MIPs ar good but then the returns are comparatively lower.
samt asked, 1. is it worth spending about 2 lacs in mf right now or should i wait 2. How are pension plan of LIC worth taking??????
Sailesh answers, hi, you should invest in equity funds if you are long term investor ie if you are willing to invest for atleast 5 years. India is among the fastest growing countries in the world. The outlook on india looks very positive over the next 2-3 years. YOu should not wait to invest - Divide the amount between 4 equity funds and invest in one fund at a time, every time market dips. Do not wait and time the market. The wait may be endless and fruitless. Go ahead an invest. I am not in favour of pension plans to plan any investor's retirement.
rajesh asked, I want to start SIP of Rs. 500 monthly in each fund 1.HDFC TaxSaver Growth 2.Axis Tax Saver Fund Growth 3.Taurus Tax Shield Growth 4.Can Robeco Eqty TaxSaver Growth so is this good decision?
Sailesh answers, hi, all these are tax saving fund. Is your objective saving tax? if yes then SIP makes sense. You can do with 2 funds - HDFC Tax Saver and Axis Tax Saver.
KR asked, I have some money which i want to invest some where to get good returns with long term view. I have few options like Gold, Shares. Could you please suggest the best investment options with long term view of 5 years
Sailesh answers, hi, the best woould be to invest in both - gold and equity. Invest 10-15% in gold via the gold ETF. The rest can be invested in equity funds. You have the right investment horizon of 5 years. Invest in diversified equity funds.
amar asked, Please suggest me a mix of mutual funds. would like to invest 5000 per month in SIP mode. Am anticipating 30% growth
Sailesh answers, hi, to begin with tone down your expectation from 30% return to 15% p.a. otherwise you will be inviting disappointment. IF you get more than 15% that is a bonus. Now for the funds - I would recommend HDFC Equity, HDFC Top, Franklin India Bluechip and DSP BR Equity
amyte asked, Dear Sir, i want to have the best plan for my daughter so that i dont have to bother for her higher education & marriage.
Sailesh answers, hi, yu havent mentioned the age of your daughther. Assuming that both the goals are 10 years away, my advise to you would be start investing in your daughter's name in diveirsified equity funds. Start SIPs in 4-5 good funds (names already shared in an answer to a question in this chat). I am sure you will be able to build the desired corpus to meet your daughter's future expenditure on higher education and marriage. I assume that you know how much you will need for both the objectives. IF you need any help with planning please mail me the details at : sailesh.multani@rediffmail.com
vikasgoel asked, one simple, what is the best way to get rid of your home loan quickly and how
Sailesh answers, hi, the simple answer that comes to my mind is to save more every month. This means you need to spend less.Analyse your spending pattern. Divide it between discretionary and non-discretionary. Try and cut down on your discretionary expense. I am sure you will be able to save more.
baiju asked, Is it worth doing day trading?
Sailesh answers, hi, the best way to lose your money for sure is day trading. Invest in equity markets only with long term point of view. According to me long term would mean atleast 5 years. Day trading involves lot of risk. Avoid at any cost.
bhavana asked,  i want to buy a second house through loan will i get a tax rebate on that ,have already paid off the loan of the first house.is it a good investment right now??
Sailesh answers, hi, if you have paid off the loan on your first property and wish to take another property on loan you can do so. you will also get the benefit of tax . Regarding the decision to buy now or later that depends upon you. If you think that there is an opportunity which you do not want to miss, then go ahead and buy.
life asked, Pl. give some ideas for short term (1 Yrs)investment. i think FDs they are provinding 6-8% but it is taxable.....Pl. give some new ideas..
Sailesh answers, hi, in the current scenario FDs are the only best investment from one year perspective. The deposit rates are likely to move up if the RBI hikes interest rates again which is almost a certainty
vk asked, I have completed 3 years with the following funds - ICICI Pru TAx Plan , SBI MAgnum Tax Gain, HDFC Tax saver. I Am a long term invertor 5 yrs + . Where should i park these funds
Sailesh answers, hi, redeem ICICI PRU Tax Saver nad SBI Magnum Taxgain. Reinvest in HDFC Tax Saver if you planning for tax saving in the current financial year. IF not then invest in HDFC Top 200 and Fidelity Equity Fund.
Francis asked, Sir I have investment in over sixty funds . All have given me positive returns varying from 9% percent to 36% .However i intend to reduce the number of funds to about 10-15 by switching.Yet every time I intend to do I look at the portfolio of scheme and back off as most of the funds have got good shares.What is your advise -should I do without timing the market since I am only rotating the funds ?
Sailesh answers, hi, consolidate your portfolio. In my view keep only 5 funds in your portfolio. It will save you times and botheration to track the same. Dont time the markets - you will be lucky twice but not everytime. Go ahead and restructure your portfolio.
sac asked, What are the ways to plan for pension?
Sailesh answers, hi, pension refers to getting a regular income on a monthly basis post you have retired. According to me the best way to create your post retirement cash flow is to have an investment corpus which can yield you regular income. This requires planning for one's retirement and one should take help of a financial planner or adivsor.
NK asked, Hello Sir, I Have invested in Fortis Tax Saver Fund during Jan 2007. Currently my savings value negetive 50%. Can I exit with above Loss (post lockin) and opt for another MF, or stay invested till my fund improves You asked, Hello Sir, I Have invested in Fortis Tax Saver Fund during Jan 2007. Currently my savings value negetive 50%. Can I exit with above Loss (post lockin) and opt for another MF, or stay invested till my fund improves. Thanks
Sailesh answers, hi, ELSS funds have a compulsory lock in of 3 years . you cannot exit from this fund unless you have completed 3 years.
NK asked, Hello Sir, I Have invested in Fortis Tax Saver Fund during Jan 2007. Currently my savings value negetive 50%. Can I exit with above Loss (post lockin) and opt for another MF, or stay invested till my fund improves You asked, Hello Sir, I Have invested in Fortis Tax Saver Fund during Jan 2007. Currently my savings value negetive 50%. Can I exit with above Loss (post lockin) and opt for another MF, or stay invested till my fund improves. Thanks
Sailesh answers, hi, ELSS funds have a compulsory lock in of 3 years . you cannot exit from this fund unless you have completed 3 years.
deepakims asked, DEAR SIR. M A 22 YEAR OLD GUY EARNING 95K PER MONTH. HAVE SOME SAVING OF AROUND 5 LAKHS IN MY SAVING ACCOUNT. WANT TO DO SOME INVESTMENTS. KINDLY SUGGEST. NOT PROPERTY AND GOLD AS MY AGE DONT ALLOW TO DO SO
Sailesh answers, hi, the best investment considering your age would be equity funds.Since you are young and have time on your age you should be wiling to take higher risk. According to me invest atleast 75% of your savings in equity funds. Invest in diversified equity funds with proven track record. start SIPs. I am sure you will be able to buidl wealth for you over the next 10-15 years.
sandeep asked, (1)should I Invest in equity mutul funds for one year to grwo my money? DO you think that equity funds will return a good value in the coming year. (2) I have invested in "Euros" which is falling at a very high rate, I am in diliema if I have to sell them now or I should wait to get a higher rate. What are the chances of euros to improve with respect to INR.
Sailesh answers, hi, if you have decided to settle in India then sell your EUROs and invest in equity funds in India. But please have a longer time horizon. I keep repeating and insisiting that equity investing is for long term. Dont wait for the EUROs to go higher otherwise you will miss the opportunity in India.
sadf asked, you have advised a long term investor to invest now in the market dont you think that our equity markets have had an overrun and they are at their peak, inflation at and high and correction really due?
Sailesh answers, hi, yes.. markets will keep running ahead of the fundamentals. Investors are expeting very good last quarter results. Hence, the markets have been running up. Yes... markets will eventaully correct to align with the fundamentals. When that will happen is anyone's guess. Dont times the markets. If you are a long term investor invest now. Invest only 50% of your surplus, the rest can be invested when the markets dip
Arun11 asked, I want to invest 10K in SIP. Should I put in a single MF or more than one ?
Sailesh answers, hi, it always pays to have a diversified portfolio. Divide the amount equally between 4 equity funds.
Jayant asked, Tell me something about the Corporate FD. Are they better than bnak deposits? Hows post taxation works out?
Sailesh answers, hi, corporate FDS are more riskier than a bank FD. Corporated FDs are more often than not unsecured loans. Hence, in the event of company going into liquidation, the investors do not have the right of claiming their money back. Hence, it is very important to deeply understand the financial of the company whose FD you are investing in . Pls ensure that the cash flow position of the company is healthy. Taxation wise both bank FDs and corporate FDs are at par.
champak asked, Sailesh do you invest? Whats your portfolio? Can you tell us your portfolio first so that we can confirm you are good at giving advice. Otherwise anyone on rediff is an expert. Yesterday only someone said on rediff that by 2015 sensex will cross 50000. I think they are still in april fool mood
Sailesh answers, hi, Yes I do invest in equities and mainly in equity funds. The funds that are recommended by me in the chat are the funds I am currently invested in. I do invest in gold also through the ETFs.
rrrrohit asked, Dear Sailesh, I am investing Rs 1000 through SIP in Sbi Magnum contra,reliance Growth,HDFC Top 200,UTI wealth builder seriesII funds.Time horizon is 5 years.Should i continue in these funds or switch to some other funds.Please advise.
Sailesh answers, hi, You can give UTI and SBI funds a miss.
guru asked, Hi,I am 32 years,Earning 1 lacs per month.My monthly expense is around 25 K..I am in telecom and not sure about grownth of the sector as there is much compitation in the market. how do I plan the investment so that I will get alteast 30 K per month in slang period.
Sailesh answers, hi, you need to make a financial plan for yourself. It is the right approach because the plan will be able to guide how much should you invest and in what proportion (mix of equity, debt and gold). Send me your query separately at : sailesh.multani@rediffmail.com
rajabhai asked, Dear Sir Howz HSBC Equity fund? I had SIP 1000 per month
Sailesh answers, hi, the fund's performance has been very inconsistent. The fund has disappointed on the return front.
NK asked, Hello Sir, How is HDFC Long Term Advantage Fund if compared with SBI Magnum Tax Gain or HDFC Tax Saver. Looking for an ELSS scheme for current year. Thanks
Sailesh answers, hi, both HDFC Long Term Advantage and HDFC Tax Saver are good funds. Invest in either of the two.
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.