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How to invest smartly and be rich

March 02, 2012 17:03 IST

MoneyAre 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 investment tips during a chat on on Friday.

Here is the transcript:

Sailesh says, Hello & Good evening - welcome to this chat session

Sailesh says, For all those who are looking forward to recommendations on various types of mutual funds, here are my picks. In the equity fund category – HDFC Top 200 Fund, DSP BR Equity Fund and Fidelity Equity Fund. In the balanced fund category, I recommend HDFC Prudence Fund. In the ELSS category – HDFC Tax Saver and Fidelity Tax Advantage Fund

bond asked, how do you feel about LIC WELTH PLUS PLAN? IS IT WORTH TO INVEST
Sailesh answers,  at 2012-03-02 16:02:33hi, this is a ULIP plan which combines insurance and investment. I prefer to keep investment separate from insurance. As far as insurance goes I recommend a pure term plan. For growing the money, I recommend diversified equity funds with an investment horizon of atleast 5 years
ankil asked, i am an engineer . i have recently started earning. 15000 p. m. sir, what do you suggest fpr saving?? bank fd or mutual funds or shares or ppf??
Sailesh answers, hi, you should start investing in a mix of diversified equity funds, bank FD, PPF for tax saving and Gold ETF.
kalpataru asked, is gold etf better than PPF and which SIP should i invest
Sailesh answers, hi, Gold ETF and PPF are different asset classes. It is wise to invest in both. Ideally your allocation to gold should not be more than % of your total portfolio. PPF is ideal for tax saving and long term goal like retirement. SIP is a style of investment. It is considered to be an ideal investment strategy for investing into equity funds.
Nita asked, Hello sir, suppose when we start SIP, fund value is 15 after 10 year fund value reach upto 105(NAV). and our total units is 500. so total amount becomes 500*105=Rs 52500. then how we can say it is compound interest? is my calcultionis correct?
Sailesh answers, hi, I am not clear about your question. Can you rephrase it?
fuddu asked, what is Gold ETF.
Sailesh answers, Hi, I would advise investors to invest in Gold Exchange Traded Funds (ETFs) as against physical gold. ETFs are mutual funds that invest directly into gold.It is easy to buy and sell units of a gold ETF compared to physical gold. Alos, the gold held by ETFs is of the purest quality.
ad_vohra asked, Any idea on whether or when DTC will be implemented, and tax saving instruments (especially ELSS) will go away?
Sailesh answers, hi, In my opinion DTC will come only in the year April 2013. You should expect the tax benefit under section 80C to continue for the next one year
ashutosh asked, Is this a good time to go for gold ETF and which scheme?
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.
Barun asked, I am investing 5000 in HDFC top 200 for last 2 and 1/2 yrs, but returns is very less, should i continue with it or move to some other fund
Sailesh answers, hi, this is a good fund. The equity market has been in the negative territory for the 2 years and. you therefore youare not seeing much movement in the fund's NAV. you should continue with your SIPs. As the markets improve, you will see positive returns from this fund.
Deven asked, Hi which MF SIP would you recommend for 14-15 years long at that time i would except good amount form small saving,Plz specify MF names.
Sailesh answers, hi, I have given the names of the funds i like at the start of this chat.
jintu asked, i have 20 lacs on my hand. advice how best i can invest?
Sailesh answers, hi, your investment surplus should be guided by your investment objective, investment horizon and risk appetite. If your investment horizon is 3 years or less then you should invest everything into fixed income securities like bank FD or FMPs. If your investment horizon is 5 years then your asset allocation should be 40% equity and 60% debt. the idea is to have a larger allocation to equity the farther you are from your goal.
Malya asked, Hi sailesh i m investing through a advisor..20% equity and rest in debt a sum of 2.5 L every investments in equty is not doing good..dsp-blackrock-small & midcap fund & idfc-sterling equity fund..Please advice whether i should continue with these midcap funds..I had invested earlier in HDFC top 200 fund but changed to debt funds to reduce the losses..Please advice
Sailesh answers, hi, you should be investing in flagship funds like the ones recommended by me at the start of this chat. You are investing in small and midcap funds which will turn very volatile if the equity markets were to turn negative. It is always better to have a larger allocation to large cap biased fuonds like Franklin India Bluchip fund. Allocation to small cap funds should be capped at 15% of the total equity fund portfolio. Also you should invest for the long term and continue to stay invested even if the markets turn volatile as equity markets are prone to volatility. HDFC Top 200 is a good fund. Now continue with your debt fund investments and wait till the RBI cuts interest rates which is when you will see a rally in the debt markets
prst asked, Hi sir, Is it good to buy fixed amount of gold etf every time it falls below certain level ? is gold etf a good investment or only a hedge?
Sailesh answers, hi, you should buy gold everytime the gold prices correct. Gold is considered as an hedge against inflation and should be invested into to diversify one's portfolio.
francis asked, hello sir, my salary is 30k/m how & where should i invest my age is 37 yrs
Sailesh answers, hi, IF you are married and have children then you should start planning for their higher education like medical, MBA, etc and marriage. Besides, you should also start planning for your retirement. To achieve all your goals, you need to have a financial plan with you. this plan will help you invest your money in a more organised manner which will ensure that you meet your goals on time.
chandu asked, Hi, I invested in Equity, out 4.5 lakh i lost 1 lakh. How to recover my money?
Sailesh answers, hi, if the stocks you have invested into are fundamentally strong then you dont have anything to worry about. If you have any stock that is fundamentally weak then you should sell the same and invest in a fundamentally strong stock. Equity markets move in cycle. A bear and a bull cycle typically lasts for 2-3 years. In my view you should hold onto your fundamentally strong stocks and wait for the market cycle to turn bullish
som asked, Hello Sir,I statred a Ulip(SBI Life Unit Plus II regular) in 2009. Yearly premium Rs. 48000. Shall It be smart to continue it upto full tenure i.e. 5 yrs.?
Sailesh answers, hi, I would advise you to continue with the ULIP till maturity. Buy going forward you should not buy ULIP if you want to grow your money. ULIP is the most mis-sold product in the insurance industry. I would not recommend this product to any investor. asked, hi shailesh is it right choice to pay back home loan within 3-4 years?
Sailesh answers, hi, I am of the opinion that one should have zero or minimum debt in balance sheet. If you have surplus funds to repay your loan then by all means go ahead and repay you loan as early as possible. Continuing with your loan means, working for your bank to provide for the interest.
saroj asked, Hi, have a housing loan of Rs25 lacs for 20yrs. Is it advisible to repay it in 5 years of time which I can or should this fund be transferred to some other investment.
Sailesh answers, hi, please prepay the loan as early as possible.
kuru asked, Hi sailesh can u tell me what are taxes applicable for Gold ETF. i mean if i have invest Rs 1,00,00 and today i want to withdraw it at Rs1,50000 then what is the taxable amount
Sailesh answers, hi, taxation in the case of gold ETF is like debt funds. IF you exit the fund within 12 months of investment, then the gains, if any, will be treated as short term capital gains and charge to tax at the slab applicable to your total income. IF the units are redeemed after 12 months of investment, then the gains, if any, will be treated as long term capital gains. In that case the indexation benefit will be available. Long term capital gains tax will be either be 20% with indexation or 10% without indexation, whichever is lower.
mayur12 asked, Dear Sailesh, I wish to know the Relaince Growth MF vai SIP of 1000 each for 6 yrs and more . how much returns i can expect.pls advice Thank you
Sailesh answers, hi, when you are benchmarking your returns from equity funds, then you should have an internal target of 12% p.a. That means the fund should deliver an average return of 12% p.a. On the actual side the fund should outperform its own benchmark.
nitin asked, can this is the right to to enter in mutual fund investments
Sailesh answers, hi, if you are a long term investor who believes in the India story which is all about domestic consumption on account of its young population, then you should certainly invest into equity funds.
dhwani asked, I am 34 yr old. i am buying a house worth 50 lacs and taking a loan of only 10 lacs for 20 yrs. I plan to prepay the loan in 3-4 years. Is it advisable or should i wait for some more years befor ei prepay the loan? ANy benefit if i continue the loan???
Sailesh answers, hi, no point in continuing with the loan. Prepay it to the extent possible
harshad asked, Hi Sailesh, I am married and want to open HUF PPF account,How and where I can open this account?
Sailesh answers, hi, you cannot open a PPF account in the name of an HUF.
vishal asked, Sailesh ji, your opinion on Midcaps in the Indian stock market with a one year horizon? The likes of DIAMOND POWER, DISHMAN PHARMA, JAI CORP etc...
Sailesh answers, hi, I would not recommend any equity investment if your investment horizon is less than 5 years.
venkat asked, Hello sir, is NPS a better and safe option to build wealth for retirement or Mutual fund is better
Sailesh answers, hi, NPS has been designed to help people invest for their retirement goal. However, NPS does not have a strong track record to show for till date. In that case, I would recommend building a separate retirement corpus consisting of diverisifed equity funds, debt funds, gold ETFs and Bank FDs.
AMITABH asked, I had invested Rs. 20000/- in JM Basic Fund in the year 2008. Normally it is advised to keep MF for long term period, hence I did not sell it. But still after 4 years, the NAV is 60% less than what was invested.
Sailesh answers, hi, JM Basic is among the fundamentally weak equity funds. I would strongly recommend that you exit this funde immediately. You may reinvest the proceeds into one or more of the funds recommended by me at the start of this chat.
gaurang asked, hello Sailesh, i want to plan for my child education (need 45 Lac in 2028), and my retirement (1.5 cr in 2035), what are be best option for me i am ready to invest up to 10 k per month for both the above purpose. suitable SIP is in my mind, is it a good idea >\?
Sailesh answers, hi, your child's education goal and retirement is more than 15 years away. In that case you should be investing atleast 70% of your surplus into diversified equity funds. 5% can be allocated to gold and the rest to debt. you should also be aware of the fact that what is the corpus you will need for each such goal and the amount you will need to invest on an annual basis to reach this goal.
Sailesh says, We have run completely out of time. I thank you all for participating in this chat. If you have any questions which were not answered during the chat, please mail them to me at