Do terms like tax planning and investment baffle you?
Do you always struggle to find the best investment option? Do you think you hardly can save anything as your surplus income is eaten up by the taxes you pay?
In an hour-long chat on rediff.com on Thursday, Rahul Goel, CEO, Personalfn.com, answered many such readers' queries.
Here is the transcript:
aditya asked, hi,pl.tell me SIPs with 8-10 years horizon.i can invest about 20000 p.m. in SIPs
Rahul Goel answers, at 2007-07-05 12:55:33aditya, hi. sips are not an investment destination. they are a means of investing in an asset like equity shares. given the time horizon, it is likely that equity funds will suit you best. but, your risk appetite will need to be factored in here. the other point to keep in mind is that while selecting funds, you need to be very careful. do not go in for the 'flavour' of the month. opt for process driven funds which will deliver over a stock market cycle. aim to invest in 4 - 5 schemes at most. again, your financial planner should be able to guide you on this.
tur asked, what is the period to evaluate MF performance - 6 month, 1 yr, 3 yr or 5yr ? many of the funds (like HDFC equity) which delivered on a 5 year horizon, did not offer good returns in the last 1 year ?
Rahul Goel answers, very good question. when evaluating a fund ilke hdfc equity, one needs to not only look at the past performance but also the way in which it is managed. its a fund which is managed by a very exprienced fund management team led by prashant jain. it has been a very good performer over longer periods; last year has been poor. but, that's ok. a fund cannot do well all the time; it should do well over a period of time. most importantly you need to evaluate how a fund performs in a declining market. you will find that hdfc equity scored very high here. so, in short, returns is only one part of evaluating the fund.
anuj asked, Hi Rahul, I am working in software field currently my annual income is 5.5lacs and i get 35k in hand on monthly bases after all the deduction. I have a total savings of 2.0lakh in stocks and MF plus 1Lakh in PPF. Currently i am going to get married at end of this year, plus i need to buy a house so what according to u shld be the best thing for me to do. Since i have to finance my own wedding as well as to buy a house in Mumbai. Please advice
Rahul Goel answers, anuj, hi. you are dealing with several objectives, like most people. you will need to prioritise your needs. since marriage is already scheduled you will need to set aside money for that; then buying a house becomes important - a home loan can help here (its also tax efficient). effectively your incremental savings will get deferred for a while. once you are married and settled down, you must try and make up for this slack savings period.
divya asked, Dear Sanjiv, my monthly cash in hand is almost Rs 1,20,000. Out of which EMIs (HL+PL+Car Loan) is Rs 52,000. I have a housing loan of Rs 30 lakhs which I took 2 years back, car loan of Rs 2,50,000, Personal loan of Rs 4,50,000. Cash in hand is almost Rs 6.5 lakhs. I have started saving almost Rs 40-50,000pm. Please suggest how do I plan my finances. My son is 8 year and daughter is 1 year. I have taken life time policy for my husband where I pay Rs 1 lakh every year(2 lac now), Smart kid policy for my son, where I pay Rs 5,000 every month(40K now). Planning to start the same for my daughter also. Where should I invest to secure my kids education, their marriage and our old age.
Rahul Goel answers, divya, hi. before getting into financial planning for your children, you should ask yourself that if you have money, then why have you got a personal loan. depending on how you look at debt, it is best to get rid of unnecessary debt as soon as possible. also, in our view, the best way to save for children is to make pure investments - in the stock markets, real estate, bonds etc. insurance is good, but very expensive. and therefore it cannot be the core savings product for your children. it should be one of several. talk to your financial planner; if you do not have one, find out someone who is honest.
SIVASHANKAR asked, Sir, I want to start SIP in Equity Fund and ELSS also? Which fund would be the best? Please advise.
Rahul Goel answers, hi. you will first need to answer why you are investig in the first place. without that input it is difficult to suggest where your monies should go. with regards to elss, there are different types of schemes out there - some are aggressive, and some convervative. you should select the scheme which matches your profile. again, remember tax planning is a subset of overall financial planning. you should invest in such a way that you save tax and also meet your long term goals and objective. that would be smart investing!
s.k. garg asked, how i should plan to invest my money in mutual fund, Insurance and equity for higher return on investment as good as tax benefits.
Rahul Goel answers, the best way is to get yourself an honest financial planner. discuss with him your objectives and draw up the plan to meet them. there are no short cuts!
Goyal asked, Hi Rahul, My question is regarding savings. How much of take home pay should one target to save/invest. Please tell me reasonable target %.
Rahul Goel answers, hi. save as much as you can. in early stages some people save as much as 50% of salary. remember, every rupee you save today, is worth more than a rupee you save tomorrow. the earlier you start putting money aside, the better it will be for you from a future perspective.
ksp asked, What is the average impact cost of mutual funds that operate in India
Rahul Goel answers, equity funds usually charge an entry load of 2.25%; some funds don't charge any load. other than they there is an annual expense ratio... which can be as high as 2.5% per year; some funds charge as low as 1.7%. these charges are significant but a small price to pay for professional money management. of course, if the money manager does not deliver, then these charges hurt!
kaul asked, i am 34 ,monthly income is 50 k,i invest 12 k on MF,and rest in insurance and ULIP etc,kindly give me some plan so to manage and invest better
Rahul Goel answers, since i am not aware of the objective you have when inevsting the money i am not able to give you concrete advice. however, don't forget insurance can be an expensive way to save money. when making fresh investments factor the costs in.
Vijay asked, Right now my earnings is 26K per month. I can save 10K per month after all expenditure. Is Mutual fund a good bet to invest in? Which is the best one to invest? If I plan to invest with 5k per month how much can i expect back after 3 years?
Rahul Goel answers, mutual funds today offer enough choice; therefore it is likely that they can be the preferred way to invest for most individuals. there are a lot of funds out there... a few of which we believe are good enough to invest money in. you will need to select the funds which suit you best - from the perspective of the asset class they invest in and the risk they take on and even the style of investing monies.
ghh asked, My annual income is about Rs 6 lakhs. What should be the best form of tax saving investment for me?
Rahul Goel answers, the most common mistake people make is that they invest money only to sve tax. we recommend that one should invest money in a manner that he is able to not only save tax but also take care of future needs (like retirement, child educstion etc). if your needs are far out, opt for elss. if your needs are near term, you will have to consider deposits that quaify for tax benefits.
kamal asked, right now am 26, after 50 i need to be free from finanial constraints. What are the best method to invest my money? earnings around 45K per month
Rahul Goel answers, kamal, hi. you have 24 years before you want financial freedon. that is a reasonable time frame. assuming that you have an appetite for taking near term risk, exposure to risk assets like equity / equity funds would be a preferred way to realise your goals. some of the money can be allocated to other assets like gold (not jewellery) and maybe real estate (via real estate funds - as and when they are available).
prasad asked, hi, i want to invest 75k in lump sum for a period of 5 years, which scheme is good?
Rahul Goel answers, prasad, hi. the important thing to know is whether or not you have an appetite for risk. if you do, you can include equity in your portfolio. if not, then this may be a good time to lock in some money in FMPs (a type of a debt fund).
Vikas asked, Dear Sir, I have holding following mutual funds(SIP). Please suggest whether my portfolio is good or not? - HDFC Tax Saver : Rs .1000/- p.m. - HDFC Equity : Rs. 2000/- p.m. - Reliance Growth: Rs. 2000/- p.m. - SBI Magnum Contra: Rs. 2000/- p.m. - SBI Magnum Tax Gain : Rs. 1000/- p.m. Please suggest whether should I change any of the above funds? I want to include two more funds(SIP) in my portfolio of Rs. 1500/- each. Please suggest which funds should I include? Regards Vikas
Rahul Goel answers, vikas, hi. i think to start with you should have only diversified equity funds in your portfolio. we do not recommend sector funds. also, we think you should consider owning funds from the more process diven amcs - templeton and dsp to name a couple. remember, you will need to select the right scheme. your financial planner should help you with this (as more information is required about you and your assets).
YK asked, I am new to mutual funds. I plan to go start MF investments. whcih are best plans to start with & what returns can i expect in Short Term 1years & long tem 3 Yrs?
Rahul Goel answers, in terms of yield, presenty you can expect to earn about 8% pa post tax from debt, where you have to lock in the money. in terms of equity, if you are guided well, you should be able to earn about 15% pa; however, it is likely that you may be negative before you actually earn your money. this is always the risk when it comes to equity.
dipesh asked, i would like to invest approx 4000 Rs per month for mutual funds for approx 3 years. Please advise the two funds which i should take
Rahul Goel answers, if you have the appetite for taking near term risk, opt for the diversified equity funds from amcs like hdfc, templeton and dsp. all these amcs have many schems; you will need to select the scheme which suits you best. you will probably require professional guidance for the same.
Ma.hdeep asked, Dear Rahul, greetings. All of us would appreciate it if you could name a couple of tax-saving mutual fund schemes. It will help us a lot. This is what we seek in such forums. Thanks a bunch for your time.
Rahul Goel answers, mahdeep, hi. if you are willing to invest in a fund which is aggressive in its style of investing, one fund to consider is hdfc tax saver. another scheme which we like is fr india tax shield. you can read more about these schemes on our website - www.personalfn.com. remember, selecting the schemes is one thing. the other part is how much to allocate to each of them.
meets asked, hi, my my age is 24 ,i m an architect,i earn 15k per month as salaried employee and 10k as freelancing designer. my earning pe r month is 25000. where should i invest this and what are prospects available for investing so that it reaps maximum benifits in 4-5 yrs.
Rahul Goel answers, the tenure you have is best suited for investing in equity funds. select 4/5 schemes whch match your profile and invest in them regularly - via SIPs. if you are able to select your schemes well, you will not need to 'churn' them over 4/5 years. this will effectively improve your overall rturns.
piyush asked, how much tax is levied on non tax saving schemes?
Rahul Goel answers, on equity funds, there is no tax levied if the capital gain is earned after holding the fund for over 12 months. dividends from equity funds are anyways tax free.
Jain asked, i need help from you guys where i can invest and get income in short time
Rahul Goel answers, if you are looking to earn a regular income, you can consider monthly income plans of mutual funds. however, there is no guarantee of the amount of monthly payout. other than that, you can opt for fds from institutions like hdfc which offer such options.
Jain asked, i have nearly to invest 5 lakhs advice me, i have already invested 3 lakhs on hdfc standard life, i have taken few shares for long term, i have invested on icici prudential, reliance
Rahul Goel answers, if you are looking to "invest" your money, then why are you taking insurance?!!
dasu asked, actually i am doing ca,how to improve my knowledge in mutual funds,finance planning
Rahul Goel answers, well, a lot of information is available these days on web sites. you can also log on to our website - www.personalfn.com.
partha sarthi asked, Hi rahul,, Thanks for coming on rediff platform. My net take home salary is Rs.55000. i am planning to take a home loan of Rs. 12 lacs for 7 years. The EMI will be approx. 21000. The property price is Rs.20 lacs. Your comments please
Rahul Goel answers, thanks. are you buying this property to live in or is it an investment? our view is that one must own only that much property which is needed for one's own use or is for the purpose of inheritance. other than that best is to avoid property given the kind of costs involved and also the fact the prperty is not very liquid when you want to sell.
rphans asked, Which MF will you suggest to buy now?
Rahul Goel answers, invest in fund which is suited to your requirement. if you wish to invest for 3 months, go in for say a short term debt fund. if you have a 5 year outlook, opt for equity funds. but do your homework before selecting the scheme!
umesh asked, hi i am nri i have earn 15 lakhs in three year. i want to invest and save for the future how could you guide me
Rahul Goel answers, umesh, hi. i will need to know more about you to be able to guide you meaningfully. the only guidance i can give you is that before committing monies to any asset, pl be sure that you have access to honest advice.
ash asked, we have invested in sundaram,reliance,hdfc,sbi tax saver mfs but we are not on plus side much so now in which mf we should invest now to get the good returns?
Rahul Goel answers, wthout commenting on the individual scheme, you must note that investments in equity do not immediately earn a return. if they do, then consider yourself lucky. one should have a minimum outlook of 3 years to earn the desired return. the solution is definitey not investing in more schemes!
AnuragGoyal asked, Hi Rahul, my question is regarding savings. What would be a reasonable savings % for a Double income no kids with combined take home income with no additional liability.
Rahul Goel answers, anurag, hi. save as much as you can. i think for a double income no kids family, a saving of as high as 50 - 60% of income is possible.
Pradeep asked, Hello Rahul I am working in PSU Insurance Co. My. Monthly income is 20000. How I should plane.? Pradeep Jain
Rahul Goel answers, pradeep, hi. i will need a lot more information that what you have provided to be able to guide you. i think the best way forward is to get yourself an honest financial planner.
murali asked, Rahul, could suggest some really good financial planner.
Rahul Goel answers, before i answer that, here's a full disclosure - the entity i represent, www.personalfn.com, also offers personalised financial planning services. i think you will need to evaluate the financial planner on your own. one way to do it is to speak to existing clients of the financial planner. this will give you a good insight.
prafull asked, Hi, Myself prafull 26yrs old. Working with TCS . my anual income is 5Lpa, I have shown HRA of 6500/- per month and have 14628/-invested in LIC. Will You please suggest me more investment available.?? I am planning to buy home in nest two years.
Rahul Goel answers, if you are planning to buy a home in two years, and are accumulating money for that purpose, in present times, the best option would be debt funds. opt for FMPs that suit your time frame. also, notice you have insurace, but no "investment". incrementally you should invest money in assets that suit your needs and profile.
Chinmaya asked, What options do you suggest for investments when the market is high. I am afraid of ups and downs if i invest now.
Rahul Goel answers, chinmaya, hi. the stock markets will always go up and down. one way to dilute this volatility is to invest money regularly - you will invest in high times and in low... and over time you will have a good average cost of holding. remember, if you can take risk, and have a 3 yr plus horizon, then you must have exposure to well managed equity funds.
natrajan asked, have invested 25 lakh in following mutual funds; HDFC Equity & prudence, Reliance vision divident, SBI Infrastrucure & contra, SBI Magnum global, franklin prima divident & franklin flexi cap growth, LIC MIP, Reliance MIP, HDFC MIP, sundran bnp paribas & tax saver, pnb blue chip, tata sip. I have invested close to 1 lakh in all funds excluding LIC MIP, RELIANCE MIP & HDFC MIP where i invested 5 lack , 2.5 lack & 2.5 lackh. Kindly let me know if you are satisfied with my fund selection porfoilio & investment. View source of this question
Rahul Goel answers, prima facie, you own too many funds. then you also have sectoral fuds, which carry very high risk in our view. this portfolio can definitely be restrucutred to offer a better risk adjusted return over a long period of time.
Raghul asked, Hi, How can i become rich say 1 crore by investing in mf as right now i can save 3-4k per month.Thanks,Raghul.
Rahul Goel answers, you can become rich. all you need to do is be disciplined. start now with what you have. over time add to your investments. the most important thing here is displine and ofcourse ensuring that you have invested in the schemes that best suit your needs.
Rahul Goel says, Thank you all for participating in the chat. Due to paucity of time, I am unable to answer more questions. Thank you.
Chat with Rahul Goel, next Thursday