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, financial planning expert Sailesh Multani offered some valuable tips. Here is the transcript:
vijay asked, i have around 20,000 surplus every month and as of now i have not invested anything i m 38 and want to invest for my retirement only, please suggest the best
Sailesh answers, at 2011-05-19 16:02:13hi, if your retirement is 10 years aways then you can safely invest 70% of your monthly surplus into equity funds, 15% into debt funds or FD and 15% into Gold ETFs.
puja asked, which is better, PPF or mutual fund
Sailesh answers, hi, according to me both are a must in one's portfolio. PPF is tax saving fixed income instrument that offerrs interest @8% and that too tax free. Mutual funds especically equity and balanced funds should be invested into to grow one's capital. It is better to have allocation to both PPF and Equity Funds.
mukul asked, i would like to invest in gold tell me the right way to do that
Sailesh answers, Hi, in my view every investor, irrespective of age and risk-profile, should have atleast 10% allocation to gold. Gold is a precious metal and will always remain in short supply. It is the most sought after asset class in times of financial distress like the one we witnessed in the year 2008. Moreover, it is a store of value. The value of gold in terms of goods and services it can buy has remained constant over the centuries. Therefore, investment in gold also serves as a hedge against inflation. Gold as an asset class is less volatile compared to other asset classes like equity, debt and real estate. It can be used to diversify one's portfolio to bring in more stability in returns. For investors who are planning to invest in gold, it makes sense to invest in gold today. However, don't buy all the gold you want to add to your portfolio in one shot. Rather spread your investment over a six months time frame. I would advise investors to invest in Gold Exchange Traded Funds (ETFs) as against physical gold. ETFs are easier to buy and sell. Please keep in mind that you will need to open a demat account compulsorily if you want to invest in Gold ETFs.
shivkumar asked, give me some equity mutual funds for long term
Sailesh answers, Hi, for the benefit of all the participants who want to invest in diversified equity funds either through SIP or lumpsum, I recommend among others the following funds HDFC Top 200 Fund, DSP BlackRock Equity Fund and Fidelity Equity Fund
babilarsh asked, is day trading more profitable
Sailesh answers, hi, day trading is a very risky money making strategy. I would never recommend this strategy to any investor. If you investing in equity, then you have to have a long term investment horizon of atleast 5 years. In my experiecne day traders ultimately end up in a loss. So stay away from it.
Mahesh asked, Which is the best Gold ETF to invest?
Sailesh answers, hi, I recommend Benchmark Gold ETF
Madan asked, What is the future of pension plans
Sailesh answers, hi, I dont recommend Pension plans offered by insurance companies at all. I would rather advise investors to work out their retirement corpus that will be adeqaute to generate regular income suffcient enough to meet all possible post-retirement expenses after factoring in inflation. Simply taking a pension plan is not sufficient.
dev asked, i need to invest yealry 30,000 in short term plans. can you please which plans to chose for?
Sailesh answers, hi, if you are wllling to invest for a period of one year then Fidelity Short Term Income Fund is the best option for you.
raju asked, how much of monthly income should go into saving...
Sailesh answers, hi, the thumb rule to judge if your savings are adequate is to see if you are able to save 40% of your total income.
email@example.com asked, Hi Expert, I come under lower income group. With smart management I save Rs. 10000 every month from which 8000 I deposit in PPF & Recurring Deposit. I am also investing in Mutual Fund Rs. 1500/-. Is it safe to invest in Mutual Fund in long term.
Sailesh answers, hi, it is absolutely safe to invest in the equity funds if your invesment horizon is 10 years. While 10 years is long enough to make money out of a well managed equity fund, the nature of the equity funds i.e are the most risky investment avenue doesn't change.
Harjot Singh asked, Hi Sailesh, i want to invest 6lacs on my fathers behalf who is retired, 63years so that he can utilise the money/interest every month, please advise as to the options if FD is the best Investment
Sailesh answers, hi, since your father is a senior citizen he should invest his savigs into 9% Senior Citizens Savings Scheme. You can invest upto Rs 15 lakhs into this scheme. This scheme pays interest every quarter. Besided you can invest his money into bank FDs for 1-3 years. One year FD fetches anywhere between 9.50% to 10% these days.
Prasad asked, Is SIP through DEMAT Account(online) is good or through directly is better?
Sailesh answers, hi, SIP whichever way you do it is ok. Follow the method that suits you.
firstname.lastname@example.org asked, Any other investing instrument apart from PPF, FD, Mutual Fund ?
Sailesh answers, hi, you can look at Gold ETFs.
sanjjay asked, hello sir, Is pension plan is a good option oi m investing 2500/- per month in Aviva Pension plan since last 6 years. Should i continue or surrender the policy and shift the fund to good MF
Sailesh answers, hi, I would like to repeat that Pension plans are not the ideal instruments to plan your retirement. SInce you have already taken one, you need to continue with the same. There is no point surrendeing the plan at a loss. Going forward, please dont buy anoymore insurance plan except Term Plans which is the best way of insuring one's life.
Ravi asked, Sir please suggest a good MIP,
Sailesh answers, hi, I recommend HDFC MIP - Long Term plan
amitava asked, hi sailesh..i have a TATA AIG policy called invest assure flexi with a premium of 50000 per year.. my fund allocation is 60% large cap & 40% mid cap... its 4 years old now and the fund performance is not satisfactory.. the current fund value is around 2.1 lakh.. the policy is for 20 yrs... whats your suggestion about the further continuation of the policy...
Sailesh answers, hi, ULIPS score very high on the administrative cost which are deducted from the premium paid by you. Therefore, you will not see any ULIP pertfoming in the initial 3-4 years. Based on my working, ULIPs break even only in the 7th or 8th year. I would advise you to please pay the premium till 7th or 8th year. Hopefully, by then you can surrender the plan in profit.
Rohit asked, How is DSP Black Rock Focus 25 Fund (growth) ? Sall we hold it ?
Sailesh answers, hi, I would rather invest in DSP BR Equity Fund which has an impressive track record of over 7 years. DSP BR FOcussed fund is a relatively new fund and I would not recommend it till it completes 3 years.
RAJABHAI asked, Please suggest three ELSS?
Sailesh answers, hi, I can recommend the one which is my personal favourite - Fidelity Tax Advantage Fund. Brilliant performance in the last 3 years.
Rajendra asked, Sir for a short term investment (3 years) what are good options"
Sailesh answers, hi, I would recommend a mix of MIP, Balanced fund like HDFC Prudecne Fund and Short Term income fund.
RAJABHAI asked, Good Noon Sir, How these two funds? 1.. Fidelity Equity Fund 2. Fidelity Tax Advantage Fund? Regards
Sailesh answers, hi, both are very good funds. A must in every invetor's portfolio
santosh asked, Sir, I had invested in HDFC simply life amt 20K yearly for two years. But even after two years the fund value is 34000 against invested value of 40000. should I withdra or continue
Sailesh answers, hi, I guess you invested into an ULIP. Please continue with the plan but going forward please dont buy any insurance plan except Term plan if you want to insure your life. If you want to make money then invest in diversified equity funds.
Ketan asked, Hello, I currently have cash of around 5 lakhs and I would like to try and double the amount by end of this year before my marriage. Can you please suggest some investment options to acheive this target?
Sailesh answers, hi, I crtainly cannot advise you any investment that can double your money in one year. I am not sure how seirous you are about dobling your money, I can only advise you to tone down your return expectation to 6% because that is what you can expect from one year's investment.
Haish asked, Hi my age is 35.i want to invest in pension plan pl suggest the right options
Sailesh answers, hi, Please engage a financiai planner who will help you draw up a reitrement plan. The plan will tell you how much retirement corpus you will have to build by the time you retire as well as the amount of investment you need to do into various asset classsed to rach your goal on time. Please dont buy an pension plan offered by insurance companies.
Purushottam asked, Hello Sir, I am 27 single . I earn 60k per month now but have not much savings till now except the ppf with 2 lakhs , company pf(as per norms) and mutual funds of 1.5 lakhs. Sir I've lost a lot of money around 9 lakhs in trading in share market .What do you suggest me taking into account my age as the investment options ..
Sailesh answers, hi, first of all please get out of the habit of share trading. Start investing your money into well maanged diversified equity funds. I have recommended the name of few funds at the start of this chat. You can invest into these funds. I am sure you will make decent sum of money.
sss asked, I invested sizable amount in stocks in 2007..it hasn't appreciated one bit in 4 years, but other asset classes -silver/gold etc have gone sky high..should I pull out all my equity n go for these/simple FD? please advise
Sailesh answers, hi, first of all get your portfolio checked through an exepert in stocks. If you are not able to manage your stock portfolio on your own, simlply liquidate your portfolio and reinvest in diversified equity funds. While FDs are a must in a portfolio, they can never subsitite the power of compounding which equity funds possess.
mitwa asked, I had given my money to well know PMS provider and suffering huge losses in stocks. what should I do ? Should I continue or exit from the stocks. Please advice.
Sailesh answers, hi, I am not in favour of giving money to PMS to manage. I always tell my clients that if they cannot manage their stock portfolio on their own, the best option is to invest in divrsified equity funds. PMS is certainly not the option in my opinion. I would honestly advise you to take your money back and invest in equity funds.
JyotsnaChaubey asked, why should I invest in life insurance...at any time all other investments give better returns than Life insurance- which just guarantees a good return in case of ONLY death... for better returns assuming there is no death in next 10 years is it not wise to invest in other instruments only from returns perspective???
Sailesh answers, hi, I agree with you. For life insurance Term plans are the best. To grow your money, diversified equity funds are the best.
Tanya asked, what are your thought on ULIPS . is it worth a buy if looking for insurance
Sailesh answers, hi, at the risk of sounding repetitive, I am not in favour of ULIPS at all. I would not recommend it to any investor. To insure your life Term plan is the best.
amsus asked, Is it a good time to invest in real estate in Mumbai??... Also would an underconstruction property be a better option right now considering the interest rate scenario??
Sailesh answers, hi, I can only say that according to me real estate prices are in bubble zone. I dont know when will this bubble burst. But I am sure that it will definitely burst. Till then I would not recommend any investment in real estate.
Muskaan asked, Instead of Gold ETF, is it better to buy gold mutual funds like Relaince Gold Savings Fund vis SIP? This way I will be able to get benefit of rupee cost averaging. The double charges (about 2%) for such fund of funds is negligible I feel.
Sailesh answers, hi, if you do not have a demat account and think that opening one would be a lot of hassle, then fund of funds like Reliance Gold Savings funds is a better option.
yogendra asked, Hi, is there any difference between Gold ETF and Gold Mutual fund or are they same.
Sailesh answers, hi, Gold mutual funds invest directly into Gold. Gold ETFs are closed ended gold mutual funds that are traded on the stock exchange.
AJA asked, Hi Sailesh, I have Jeevan Anand money back policy of 8Lac. This year it will complete 5years and I will be geting 1.2Lac , I am thinkig to surrender is it wise to do that or continue with it, pls suggest.
Sailesh answers, hi, surrender only if you made a profit.
smodi asked, hi i have investment in HDFC-top200 ;HDFC equity; Relaince growth fund and IDFC premier equity .HDFC MIP and Reliance MIP I am looking for 5 years investment Please let me know do have ot chnage combination ? Overall equity exposure is 58% and rest is Debt.
Sailesh answers, hi, overall a good portfolio.
newbiw asked, i have sbi magnum global fund - 94 certificates for 100 units. it was bought in my name by my father when i was minor. how do i encash this?
Sailesh answers, hi, first of all change the status to major by writing a letter to the fund house. You will have to give few supporting like your birth cetificate, PAN card photocopy etc. Once the units are transferred in your name, you can give a request for redemption.
nish asked, is canara rebecco Tax saving MF a good buy..also pls tell me whats an MIP
Sailesh answers, hi. Canara Robeco Tax Saving Fund has done well. Given an option I would invest in Fidelity Tax Advantage Fund. Monthly Income Plans (MIPs) are essentially debt mutual funds. These funds typically invest 20%-25% of the corpus in equity related instruments like stocks. The balance 75%-80% is invested in relatively more safe instruments like corporate bonds, government securities, treasury bills and money market instruments. MIPs are structured to deliver higher return than a bank FD. However, it should be kept in mind that MIPs are market linked instruments. Therefore the returns are not assured. These investment products are suitable for investors who are willing to take some risk and have an investment horizon of 18-24 months.
123 asked, Sir, I am a starter and can invest upto 2-3 thousands per month. Please advise me the best option accordingly.
Sailesh answers, hi, if you are willing to take risk and invest for atleast 5 years, then start SIPs into diversified equity funds recommended by me at the start of this chat.
sagwara asked, I had three ELSS --- 1. HDFC TAX SAVER 2. BSL TAX RELIEF 96 3. SBI MAGNUM TAX GAIN What to do?
Sailesh answers, hi, one ELSS fund in portfolio is sufficient. You can keep the HDFC Tax Saver and redeem the rest
Ranjeet asked, Are company FDs safe instrument for investment purposes?
Sailesh answers, hi, before you invest in any company FD please study the financials of the company properly. It is important to study the track record of the company with respect to payment of interest and repayment of capital. You should also study the ratings assigned to the FD by various rating agencies like ICRA snd CRISIL. It is my observation that investors are often lured by the name of the company and the higher interest rate offered by them. Investors usuaully dont study the credit risk of the company.
vkk asked, SBI Magnum taxgain Growth I bought it at 2007 can I redeem now .it is not performing I think.
Sailesh answers, hi, in my opinion you should redeem this fund
shahrajesh75 asked, is premium paid towards conventional life insurance policy deductable for tax rebate under direct tax code
Sailesh answers, hi, premium paid towards life insurance policy is allowed as deduction even under the new DTC
vis asked, Sir,Is reliance banking fund performing well?
Sailesh answers, hi, this fund is not performing well because the banking sector has been at a receiiving end because of the interest rate hikes in the past few quarters. This has led to a fall in the earnings of the banking companies which is feflected in the share price of those companies. In principle I dont recommend any sectoral fund. Therefore I dont recommend Reliance Banking Sector Fund. I would advise you to invest in diversified equity fund instead.
sagwara asked, How is these two funds??? 1.. BSL SPECIAL SITUATIONS?? 2.. RELIANCE SMALL CAP?? How is these two funds??? 1.. BSL SPECIAL SITUATIONS?? 2.. RELIANCE SMALL CAP?? How is these two funds??? 1.. BSL SPECIAL SITUATIONS?? 2.. RELIANCE SMALL CAP?? How is these two funds??? 1.. BSL SPECIAL SITUATIONS?? 2.. RELIANCE SMALL CAP?? How is these two funds??? 1.. BSL SPECIAL SITUATIONS?? 2.. RELIANCE SMALL CAP??
Sailesh answers, hi, Not recommended at all.
rajesh2282 asked, which is better growth or dividend or dividdend reinvestment
Sailesh answers, hi, if you want to grow your money then growth option is ideal
pravi asked, Hi I have a cash around 4 lakhs, how should I invest it for my son future education who is currently 3 years old.
Sailesh answers, hi, if you are looking at building an education corpus for your son, then start investing in diverisified equity funds from today.You can start SIPs in the funds recommended by me at the start of this chat.
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: email@example.com