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Invest wisely and be rich!

November 04, 2010 17:26 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, financial planning expert Sailesh Multani offered some valuable tips. Here is the transcript:

Sailesh says, Hi, good evening and welcome to this chat session. Before I start the chat, I wish all the participants a Very Happy and a Prosperous Diwali.


Pavan asked, Is it wise to invest in real state in NCR region to get possession after 3 yrs say?
Sailesh answers,  at 2010-11-04 15:59:42Hi, i have been maintaining for the past one year that real estate prices are in the bubble zone. Therefore, I will not recommend any investment in real estate at the current levels. As an alternate I would recommend investment in equity funds. The only reason is that it is much simple to manage and liquidate a portfolio of funds or stocks. Getting out of real estate in times of crises can be very difficult
shourie asked, Hello Mr.Shilesh, can we still invest in Gold at these levels with so many issues hovering around the world, what will be the fate of gold in the next 1 or 2 years
Sailesh answers,  Hi, in my view every investor should allocated 10% of his portfolio to gold. The investment in gold should be used as an insurance rather than making quick money out of it. Gold is the most sought after commodity whenever there is a financial crisis. The western world is still grappling with the impact of the financial crisis of 2008. It will be few years before the developed economies are back on their feet. Till then gold will continue to be in demand. I would therefore advise all the investors to start allocating 10% of their portfolio to gold. Invest only in Gold ETF rather than buying physical gold. Also, don't rush to buy all the gold at one go. You can stagger your investments and buy gold on every dip.
aruncap asked, Sir ji, end of 2010 they say markets will collapse and this is the right time to take the money out...whats your take on this
Sailesh answers, Hi, it is always a good practice to book profits whenever there is an opportunity to do so. Dont wait for a Sensex level or a Nifty level or for that matter end of year. Basically, whenever your stated asset allocation has changed, it is better to bring it back to the original level. For e.g if your stated asset allocation is 60% equity and 40% debt, and because of a stock market rally your allocation has changed to 70% equity and 30% debt, then you need to book profit in equity and invest the same in debt to bring your asset allocation to the original level. Also, you should book profit whenever there is excess profit than what you ha targetted. For e.g if you have targetted 15% return p.a. and if you are getting a return of 30%, then it is better to book profit to the extent of excess retrun (30%-15%). Booking profit and being disciplined is the key to being a successful investor. A lot of investors make a lot of book profit but they never book profit and then they blame the market.
pavank asked, Hello Sailesh, I have retired in October of this year and i have 10 Lakhs at my disposal. i will keep 6 lakhs in MIS and what does you advice me with respect to the balance amount of Rs.4-5 Lakh, i can take risk up to 2 Lakhs. Pls advice
Sailesh answers, hi, you can invest Rs 2 lakhs in Bank FD and the remaining Rs 2 lakhs in 4 diversified equity funds. The investment in equity funds should be done for the long term, say 5 years and more. the objective should be to grow your capital over the long term to delay the process of capital erosion on account of inflation.
rajan asked, I want to Satrt SIP in the DSP B Equity Fund, Fidelity equity Fund, Reliance banking, Birla Sun life dividend yield plan are these funds are good to start SIP for rs 1000 each. Or please suggest some fund to start SIP.
Sailesh answers, hi, I dont recommend Reliance Banking and Birla Sunlife Div Yield. Rest both the funds are ok to start the SIP
baka asked, I can invest about 50k per month. Pls suggest me of good options
Sailesh answers, hi, the choice of investment avenues will depend upon your investment objective, risk appetite and investment horizon. If you are willing to take risk and invest for 5 years and more then it makes sense to invest a larger portion of your investible surplus into diversified equity funds. If you want safety of capital with reasonable good returns then you can consider investment in balancd funds of Monthly Income Plans (MIPs)
ramarajan asked, Tell me I should stay with ICICI infrastructure or quit? For Gold, Do you expect prices are going to come down after diwali?
Sailesh answers, hi, exit ICICI Infrastructure fund. Gold price does rally in festive season. We have seen that already. But, gold price is not dirven purely by festive demand. Gold has been in demand as it happens to be the most sought after commodity whenever there is trouble in the economy. recently there was a fear of double dip recession in the US. Therfore, the gold price shot up. As of not the price is stabilised. You can buy some gold at the current level and wait for the festive season to get over. See the trend and then buy some more.
hungrycunt asked, Hi Shailesh, I am sitting on a big pile of cash (around 10 lakhs) - some of which I got exiting in the current rally. Can you advice what my next step should be? Should I wait or re-enter now as this rally seems to be not going down at all..
Sailesh answers, hi, since you have made money in the equity market, I would not recommend that you invest the all of it when the market corrects. Rather the best thing to do would be invest in a safe investment product like Bank FD. your aim to should be to protect your profits and not expose it to the risk associated with the equity market. Invest say 10% in gold.
muralim asked, Hi, i am also one among many losers in the stock mkt crash in year 2008. i have now become bit skpetical ti invest in the market. However i am investing small amounts in MF thro SIP. At the same time seeing the present market consitions i am tempted to invest in Stock market.Could you please throw some light on the Market scenario, as pundits are telling there will be huge funds (FII's) also from Domestic Fund Houses and the scenario this time is not like the one in 2008. i Appreciate your thoughts on this and also on your investment advise. Thanks
Sailesh answers, hi, dont get carried away by the market rallies, continue with your SIP. Yes, its true that a lot of money is still going to come into emerging economies like India. But that should not worry you. your fund manager is there to take care of the stock market. you have to select only the best performing funds! Sit back and relax.
Meena asked, Hi Happy Diwali! Its said theta one should invest in mutual fund for a long year – now the question is how long should one invest in given fund and when ist appropriate time to remove or book profit
Sailesh answers, hi, i would rather recommend that one should invest in equity funds only if the time horizon is 5 years and more. Equity investment is all about patience and discipline. You should book yor profit only when you have made more than the target return. The best is maintain an asset allocation level at all time. whenver there is a change, book profit and bring it to the original level.
hungrycunt asked, why are bank gold coins charging 100 to 1500 extra?
Sailesh answers, hi, I would like to advise all the investors through this chat that they should not buy physical gold coins through banks. The reason is that banks sell these coinss at a price that is 4-5% premium to the market price. If your objective is to invest in gold, then the Gold ETF is the best. Please dont get carried away by the fancy advertisements in the bank branches offering you festival discount on the gold coins sold by them. The price of the coins is at a premium despite the fetival discount!!
pradeep asked, can i invest in Coal India at present level, i missed the IPO?
Sailesh answers, hi, I would not recommend. Most analyst think that the fair price of the stock is Rs 290. I think investors were carried away by the festive cheer today. there is no point buying the stock at a 40% premium.
Gauravfzd asked, What is your outlook for the markets in the near term? Can you suggest some good mutual funds to start SIP in from a long term growth perspective. I already have SIP in HDFC top 200, HDFC equity, Reliance Growth and Reliance Regular Savings. 1,500 each. Can do 3 more SIPs.
Sailesh answers, hi, the best thing about equity market is that nothing can be said about the near term whereas the long term can be reasonably predicted. In the short term the market may rally because of the strong liquidity condition. But, as always there will be sharp corrections. But if you are long term investor willing to stay invested for 5 years and more then the corrections should be used as an opportunity to invest. I usually recommend that investors invest in equity funds via the SIP route. Continue with SIPs. You can start SIP in Fidelity Equity Fund and Franklin India Bluechip Fund.
ashit asked, hi, which mutual fund schemes would you recommend for long term investment, given the high current market rates
Sailesh answers, hi, my favourite funds currently are HDFC Top 200 Fund, DSP BR Equity Fund and Fidelity Equity Fund.
baby asked, will it poossible in gol d etf during mukgurat trding?
Sailesh answers, hi, yes you can buy Gold ETF in the muhurat trading
ashim asked, I am holding equity diversified MFs .Since sensex is around 21000 , should I sell MFs .
Sailesh answers, hi, sell your entire portfolio only if you need the money to meet your objective for which it was invested. Otherwise, only take out the profits and reinvest the profit into safer investment instrument like debt or gold. Dont take the sensex level as the deciding factor.
Ganapathy asked, I had bought 2 houses and prepaid all the loans. What are the investment options for me considering that i do not have any emi to pay for? I want to consider good investment option.
Sailesh answers, hi,since you are used to paying the EMIs and you dont have any EMI to pay, I would recommend that you start SIPs in well managed diversified equity funds. This will help you build your corpus to meet your long term goals like retirement.
SANNUP asked, WHICH IS THE BEST GOLD ETF FOR INVESTMENT
Sailesh answers, hi, I usually recommend Benchmark Gold ETF
ashim asked, I want to invest Rs. 1.2 lakhs pm . I am a CA ,working , currently 51 . I can take risk . Pl. suggest some good MFs.Thanx .
Sailesh answers, hi, you can invest in 4-5 diversified equity funds via the SIP route. I have given the names of my favourite funds earleir in this chat
RAJNEESH asked, I HAVE INVESTED RS. 3 LACS IN 3 YRS IN HDFC STANDARD LIFE ULIP PLAN. SHOULD I EXIT OR REMAIN IN THE POLICY. PL. SUGGEST
Sailesh answers, hi, I would recommend that you continue paying your premium. But, dont buy any more ULIPs.
arkl asked, arkl: i have invested 40 thousand in equity for long term returns for say a horizon of 5 years and parallely enagages in a intraday training for an amount of 10 thousand..apart from holding a MF portfolio of another 10k..do u think this is a good pattern to follow..i am basically a risk taker when it comes to investment
Sailesh answers, hi, I dont agree with your strategy of day trading. I personally believe that day trading ultimately only benefits your broker while the investor remains a loser. Always be a long term investor.
MaheshPai asked, I am investing in diverified MF through SIP. I had started about two years back. My expected returns were 15% p.a. But as of now I am getting more than 30% p.m. as returns. My original investment horizon was 5 years. Should I start booking the excess profits earned?
Sailesh answers, hi, by all means take out the excess 15%. do it tomorrow itself.
LUCK asked, I am planning to sell my gold+diamond engagement ring which i got 4 years back, do u think its right time to do so.......!
Sailesh answers, hi, if you made a lot of money then by all means sell it. But, I dont recommend selling precious metals. It should be there in your portfolio as an insurance. Above all take permission of your spouse before taking any action. there may be a sentimenal value attached to it!!
FishMan asked, What are the prospects of Bharti Airtel? Is there any upside for this stock?
Sailesh answers, hi, this stock is for long term investor. You will see action only after 2-3 quarters.
Rahul asked, Hi Sir, I had invested Rs. 40,000 in ELSS Reliance Tax Save in March 2007. I am getting Rs. 70,000 at this point. I want to book the profit and invest somewhere else. Where to invest?
Sailesh answers, hi, take the money out of the ELSS fund and invest in other better performing diversifed funds like HDFC Top 200 Fund.
yosh asked, Hello What are good investment options for a middle class person
Sailesh answers, hi, the best way to build wealth for salaried investors is to start SIP in equity funds. You should be a long term investors and continue with SIP for 5 years and more to see the results. Dont expect instant results.
moulali asked, hi sailesh please suggest two or three mutual funds for my child marriage after 18 years
Sailesh answers, hi, to meet any long term goals, goals which are 5 or 10 years away, the best investment is equity funds. Therefore, for your child's marriage invest in equity funds. Dont forget to allocate 10% to gold.
Chattoo asked, Do you think the sudden surge of FDI/FII is only a ploy to inflate the markets currently and then pull out in some time???
Sailesh answers, hi, very dificult to figure out such a thing. That is why it is always better to take the money off the table. One never knows when the party will end.
nitin asked, Sir as suggested by you if one keeps booking profit regularly how would power of compounding work?
Sailesh answers, hi, I have recommended profit booking only when your profit is in excess of the target profit. this way your power of compounding is not affected.
hsj asked, I am 48 and have taken HDFC Pension Super with 3L per annun for 5 years (without Insu.). Your feedback on this and how much pension typically u would suggest to have for time of 10 years from now.
Sailesh answers, hi, I am not a fan of insurance when it comes to retirement planning. I would never recommend a pension plan to any investor. The amount of pension should be equal to your annual post retirement expenses.
master asked, hi, Is it good to invest in Midcap/Small cap funds if so can you let me know which one to go for
Sailesh answers, hi, it is always good to have some allocation to midcap funds. theese are the companies that are gowing faster than the large companies. therefore the returns can be higher than a large cap fund. I recommend sundaram midcap Fund
balaji asked, Which SIP is gud for tax saving...plz suggest
Sailesh answers, hi, my favourites is Fidelity Tax advantage
TKN asked, As the market is in upward trend , Is it the right time to invest in mutual funds like HDFC Top 200 Fund? Please advice
Sailesh answers, hi, certainly good time to invest. But invest via the SIP route
ramya asked, hello sir, how the process gold etf works ,can we invest Rs 500 monthly in gold etf's.kindly suggest
Sailesh answers, hi, you can invest in gold ETF every moneth Rs 500. You will have to purchase the units worth Rs 500 every month. There is no SIP in Gold ETF unlike other mutual funds.
irfan asked, i want to ask you abt investmenting in companies such as stockguruindia and sapphire investment solutions which promise to pay 20% monthly returns on the prinicipal with a lock in period of 6 months and 1 year.These companies invest in stock,commodities and forex. please reply
Sailesh answers, hi, I would never recommend such investment schemes to any investor. Please ensure that the schemes have been approved by SEBI.
skr1969 asked, Hi Sailesh...I have burnt my fingers in Equity market and donot want to invest in equity and I have around 30L in FD's but want to invest where it can give more incentives..Can you suggest..what are good options for me?
Sailesh answers, hi, consider investing in MIPs from mutual fund. These funds invest 75-80% in debt and the balance in equities. This is best for low risk investors.
Amby asked, What would be your ideal Retirement Planning plan for a 31 yr old (if it should not be insurance, as you mentioned)?
Sailesh answers, hi , you should build a retirement corpus comprising of equity funds, stocks, bank FD, debt funds and Gold ETF. The corpus should be large enough to last your life time and adequate to generate regular income sufficient to take care of all your post retirement expenses.
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@gmail.com. Wishing you a Happy Diwali once again!