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Investments that will make you rich

May 27, 2011 12:39 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?

During an online 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

Sailesh says, 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

siva asked, IS GOLD IS AN GOOD INVESTMENT IN THE LONG RUN?
Sailesh answers,  at 2011-05-26 15:58:07Hi, 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.
chs asked, hello Sir, Do you think SIP is the best investment then property investment over the period of 10 years?
Sailesh answers, Hi, there are two main attributes of a successful investor – patience and discipline. SIP takes care of the discipline. It inculcates the habit of investing regularly without having to worry about the index level. Since the units of mutual funds are bought at different NAVs, it results in lowering the average cost of purchase over a period of time. For this it is important that SIP continues through the market cycles.
Vivek asked, good afternoon!!! i wanted to ask you is it the right time to enter into stock market...& which stocks are to be preferred to gain...??
Sailesh answers, Hi, according to me India continues to remain one of the most attractive destinations for investments. The sheer size of India's young population is going keep the consumption story alive for many years to come. This augurs well for the capital markets and if any investor has an investment horizon of 3 years then India is the place to be. I would advise investors not get carried away by the short term hiccups like scams, inflation, rising interest rates, etc. These should be treated as blessing in disguise. Just invest in 4-5 best diversified equity funds through the SIP route and see your money grow. It is that simple!
nish asked, What are balanced funds
Sailesh answers, Hi, balanced funds are mutual funds that invest atleast 65% of their corpus into equity related instruments like stocks. The balance 35% is invested into safe and assured income yielding debt instruments like government bonds, corporate debt and money market instruments. These funds are ideal for investors with moderate risk appetite and investment horizon of 3 years.
mar asked, How to invest in silver. Is there any silver ETF?
Sailesh answers, hi, there are no sliver ETFs. The only way to invest in silver is to buy the physical metal or buy silver futures.
manoj asked, Sir, MF such as HDFC top 200, fidelity equity, fidelity tax advantage was started by me last year in SIP and this year all of them are in negative even thought market in gud condition. shall i continue the sip, stop it or switch over to other mf
Sailesh answers, hi, you have invested in the best mutual funds. Please hold onto them.
Balaji asked, how about investments in DLF, Unitech and Omaxe at the prices now.
Sailesh answers, hi, please avoid real estate sector for the time being. Real Estate prices are in bubble zone. When will the bubble burst is anybody's guess. But it will burst. So stay away from this sector.
Balaji asked, is infrstructure stocks good for 4 to 5 year investment perspective
Sailesh answers, hi, it is a myth that most investors carry that infrastructure companies make a lot of money. the reality is that most of these companies hardly make any money. Infrastructure development may be good for the economy but it doesnt necessarily maean that company involved in the construction of the same will also make money. I would advise investors to stay away from this sector and rather invest in a diversified equity funds that have the flexibility to invest across sectors.
gt asked, i'll get 142000 from lic in august..where shld i invest this money..i am 28 yrs 7 self employed?
Sailesh answers, hi, if you want to plan for your long term goal like retirement, then invest this money in diveirsified equity funds. I am sure that this is is the best investment avenue to meet your long term goals.
Arun asked, what stocks we can pick up in our portfolio for best returns after 5 yrs down the line frm now...i guess power and banking sector would be the best n safe bet ?
Sailesh answers, hi, i would encourage investors to avoid investing directly into stocks. Stock picking is a specialised activity and best left to professional fund managers. The best option is diverisified equity funds.
pep asked, to target 30 lacs return over 10 years horizon what kind of a) one time lum sum investment /b)annual investment required
Sailesh answers, hi, assuming an annaul return of 10% from your investment, if you invest Rs 188000 (approx) over the next 10 years, you can expect to reach your target of Rs 30 lakhs
CHINNA asked, CAN I INVEST IN AXIS TAX SAVER
Sailesh answers, hi, I would prefer Fidelity Tax Advantage fund over Axis Tax Saver. Fidelity has a longer track record to show for.
jinu asked, i am planning to redeem icici life time gold and icici life stage pension, should i do so or leave it
Sailesh answers, hi, I would not advise you to surrender these policies at a loss. you should continue with them. Going forward invest in diverisified equity funds if your objective is to grow your money to meet your long term financial goals like retirement
mohanc asked, Sir, I Mohan having SIP in HDFC top 200 fund growth since 2 years should I redeem or hold for another 2 years
Sailesh answers, hi, hold on to this investment and continue your SIP
Murugavel asked, Sir - I am 42 yrs, now I am expecting rental income of Rs.5000.00 from Jul-2011 and this amount I am planning to invest for another 10 years, where to invest. pls suggest.
Sailesh answers, hi, if you are willing to take rsik then the best option for you is diverisified equity funds. Start SIP into the funds recommended by me at the start of this chat.
BHATIACP asked, U HAVE REFERRED DIVERISIFIED EQUITY FUNDS PLEASE SUGGEST GOOD DIVERSIFIED FUNDS
Sailesh answers, hi, I have given the names of the funds at the start of this chat
Aavisek asked, What is the best mutual fund to invest for next 24 months as per you?
Sailesh answers, hi, if your investment horizon is only 24 months then the best investment is MIPs. 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. MIPs are more tax efficient compared to bank FDs. Interest from bank FDs are taxed as 'income from other sources' and clubbed with the total income. The appreciation in the value of MIPs is treated as capital gains. Long term capital gains from MIPs (units held for more than a year from the date of investment) are allowed the benefit of indexation and therefore subject to concessional rates which is 10% without indexation or 20% with indexation, whichever is less.
pk36 asked, i want to acheive 50 lakh after 20 years where should i invest and how much
Sailesh answers, hi, assuming that your investment will grow at an average annual rate of 10%, you should invest Rs 88000 p.a. to reach your target of Rs 50 lakhs in 20 years. To earn 10% on your portfolio, you need to invest atleast 60% of your investible surplus into diverisifed equity funds and 40% into debt funds or bank FDs.
Bidyadhar asked, Dear Sir, Pls advice some investment options with Tax benefit and better return related to DTC next year.
Sailesh answers, hi, I would like you wait till the DTC comes into force. There is a lot of confusion with regard to tax planning.
KOTESWcJ asked, sir, i have invested a few thousands in tata mutual fund, birla advantage fund in 2000. I did not recieve any statements after that and I also got frequently transferred to various place. i have the initial year statement. how do i redeem? regards rajesh
Sailesh answers, hi, you can go to the websites of the respective funds and download the transaction form. you need to fill up the redemption portion of the form and send it to CAMS which is the registrar for both these funds. CAMS website is www.camsonline.com
Kannan asked, With respect to DTC, is ULIP a right option for Insurence? (For Pure insurence)
Sailesh answers, hi, ULIP is not at all a good investment or insurance plan. If you want to grow your money then you should invest in diverisifed equity funds. IF you want to insure your life then opt for the TERM Plan which is offers higher sum assured for lower premium.
srinivasu asked, these days stock markets are highly volatile. Hence is it advisable to make investments in stocks and mutual funds for long term growth?
Sailesh answers, hi, if you are a long term investor, someone with a time horizon of 5 years, then short term fluctuations should not bother you. Equity markets are volatile by their very nature. They keep fluctuation based on the news flow but it should not matter to a long term investor. As long as you are invested in the best of the stocks or mutual funds there is hardly any need to worry.
GTO asked, Would you advise parking money in FDs for 5 years keeping in mind the attractive interest rates at this point of time. I do not require the money at this point till 10 years.
Sailesh answers, hi, you can lock-in your money for 5 years if you are ok with the same rate of interest forthe next 5 years.
esctofun asked, kindly revert, i repeat my question Hi, Iam a small time investor, I can invest only 1000 to 2000 per month, suggest me how should & where should I invest the amount that I can get maximum benefits in future, let say after 10 years
Sailesh answers, hi, the best strategy for you is to start SIP into the funds recommended by me at the start of this chat. I am sure over the next 10 years you would have built a very large corpus out of your monthly savings.
dk_812 asked, Hello sir.......I have been investing in Reliance diversified mutual fund and reliance regular savings funds since last 1 year.the return is negative should I continue with them....or withdraw my money.? Please answer this query.
Sailesh answers, hi, you are not invested in the best of the funds. I would recommend that you redeem these funds and invest in the funds recommended by me at the start of this chat.
mahesh11 asked, suggest balanced equity fund, please
Sailesh answers, hi, the best balaced fund is HDFC Prudence Fund.
Gary asked, Hi i am 29 earning close to a lac per month could you suggest me what should i look for in terms of investments or which asset class could give me better returns
Sailesh answers, hi, you should consider investing a larger portion of your savings into diversified equity funds via the SIP route. A small portion , say 10% can be invested into gold ETF. The rest can be invested into debt instruments. A portfolio combining these 3 asset classes is best geared to help you achieve your long term financial goals like retirement.
shri asked, investment plan 4 a girl, i have a 1.5 year daughter
Sailesh answers, hi, assuming that you are planning to build an education corpus for your daughter over the next 15 years, the best investment option for you is diversified equity funds. I would not recommend any insurance plans for this purpose.
Rakesh_388 asked, Hi Sir, I have 3 lac cash and i'm 28 year old, i'm planning to get marry next year and i may need lot of money during that time, where can I invest this money so that i can liquidate next year along with good returns, Please suggest me. Is a Gold ETF is good option at this time?
Sailesh answers, hi, the best investment for one year could be ultra short term income fund or bank FD. I would not recommend Gold ETF for this purpose.
Satyaki Sengupta asked, Hi, my age is 33 and Im a salaried individual. Im an orthodox Invester on LIC. Ive couple of policies such as Jeevan Saral, Bima Gold, LIC Money Back and recently did a Samridhhi Plus. I am afraid to go for Unit Linked Policies of pvt insurance companies as I dont understand ABCD of Shares or Equity. Ive also a PPF A/C and a few FDs. Please let me know how can I organise my investments in a more productive manner.
Sailesh answers, hi,I can understand that you are risk averse and do not want to lose your hard earned money by investing into stocks. But please keep in mind that only equity as an asset class has the power to grow your money faster. I would advise you to start SIPs in the funds recommneded by me. You can start with small amount to begin with. When you have gained enough confidence you can increase the SIP amounts. Please stay away from ULIPs - publice sector and private sector.
abde asked, Hello with the term insurance we pay an amount for insurance and then we keep on patying.if everyting goes well with our life then we loose all the money right?
Sailesh answers, hi, that is the whole purpoe of insurance - to protect your life. If you want to grow your money then invest in equity funds.
nish asked, How do u suggest to distribute ones portfolio in large cap...mid cap..small cap and gold say percentage wise...pls suggest
Sailesh answers, hi, I can igve a broad allocation - 60% can be in large cap funds, 10% in midcap funds, 10% in small cap funds and balance 20% in gold ETFs.
ali asked, sir which is beat tax saving mutual fund
Sailesh answers, hi, my pick is Fidelity Tax Advantage Fund and HDFC Tax Saver.
HARDIK123 asked, WHICH IS BEST GOLD ETF
Sailesh answers, hi, I like Benchmark Gold ETF or Gold BEes
Sidgo asked, Looking at the current market conditions, if I have an option of putting my money into PPF or mutual funds (debt), which one should I choose ? I am looking at a 10 year horizon.
Sailesh answers, hi, the best strategy is to divide the money between equity funds, bank FD or PPf and Gold ETF. If you have 10 years investment horzion then you should probably invest 65% of your surplus into diversified equity funds, 10% in Gold ETFs and 25% into PPF
samiran asked,  i bought a house. i have taken home loan from bank for 20yrs. but i want to clear off that at least in 5yrs in which interest rate is fixed. kindly suggest me investment by which i can clear it with in 5yrs. my home loan is Rs.25 Lakh current salary 60000 p.m. , current emi of home loan:- 24375
Sailesh answers, hi, you should accumulate your savings into ultra short bond funds and prepay the housing loan at the end of every year. Please dont invest in equity funds as these carry maximum risk.
Bidyadhar asked, sir, pls advice some good investment plan which can help my son's higher education after 18yrs. my son is now 2yrs.
Sailesh answers, hi, the best way to plan for children's education is to start SIPs into well managed diversified equity funds. Since these are long term goals, equity funds are best equipped to grow oyour monthly savings into a sizeable corpus.
amitc asked, Sir, when do i buy a property in Mumbai? When is right time
Sailesh answers, hi, I dont know when will the prices of properties correct in Mumbai, But I am sure that one should stay away from real estate investment for the time being.
malay asked, Sailesh Sir, Do you think that before DTC comes into force, there will be a lot of selling in the indian stock markets to book profits. Should we wait for sometime before investing deirectly into stocks??
Sailesh answers, hi, according to me all the investments done prior to the DTC, will not be affected by the provisons of the DTC. Therefore, I dont anticipate any major sell-off to book profits before DTC comes into force. If you are long term investor then go ahead and invest. Please dont wait for the DTC to come into force.
manjaree asked, hi i actually don't kno much about investments so my frd told me to put money in insurance like max, hdfc etc.do u think i should take out money now and invest in mutual funds.
Sailesh answers, hi, since you have already taken the insurance plan, surrendering them midway doesnt make any sense. First and foremost you should change your advisor because you were misled into buying insurance plans whose main job is to insure your life and not make money. If you want to grow your money then diversified equity funds are best equipped to do the job. Going forward dont buy any more insurance plans.
eskay asked, 1_) Me & Wife have a property jointly and share the EMI for Tax purposes, also invest in TAX saving instruments. Would you prefer depositing this (tax saving)investment into HFL to avoid higher EMI. 2) Would like to accumulate 25L before 2018. Monthly surplus Rs.10K. Regular investment of Rs.40K P.A already done.Your suggestions pl.
Sailesh answers, hi, you should write to me with more details to : sailesh.multani@gmail.com
adasd asked, pls provide your opinion about investing in PPF /NSC??
Sailesh answers, hi, both PPF and NSC are good investment options. both qualify for tax saving under section 80C. Between PPF and NSC I would prefer PPF as PPF offers 8% tax free interest while NSEC offers 8% which is taxable.
BINU asked, Shailesh Sir , I want to Invest 7/8 Lakhs to very good shares or scheme ...which can give me 50/ 60 % return in next 3 years ..Please suggest and Help !
Sailesh answers, hi, are you looking at an average return of 50% every year or is it absolute return in 3 years. In my opinion there is no investment instrumen that can give you these kind of returns. I would advise you to reduce your retrun expectation to 10-12% p.a. Anything above that should be considered as God's Grace!
manikandan k asked, Hi, Is ICICI Pru Smart Kid a good plan to have?
Sailesh answers, hi, I would advise all the parents planning to build the education corpus for their children to focus on investing in diversified equity funds via the SIP route. Children plans offered by insurance companies are not among the best invesment avenues to build the education fund. Insurane plans should be taken only by the working parent and that too should be restricted to Term Plans.
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