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Rediff.com  » Business » Mantra of wealth creation: Earn, save, spend

Mantra of wealth creation: Earn, save, spend

Last updated on: March 13, 2013 18:43 IST

Gaurav Mashruwala is a renowned financial planner. In a chat with our readers, he shared tips on investment, debt, and spending.

Here’s the transcript:

raj196 asked, Is it better to invest in mutual fund or look at blue chip stocks with growth potential for long term capital appreciation 
Gaurav Mashruwala answers, If you have skills and time both then investing in bluechip is better, else stick to mutual funds.


sanjeev asked, Hi Gaurav, what is the status of ppf account for minor?does it earn interest?some confusion on this account.
Gaurav Mashruwala answers, Existing PPF account will continue to earn interest.


abc asked, will i get interest benefit as proposed in recent budget for an existing home loan of 29 lacs
Gaurav Mashruwala answers, If you are purchasing your first home in new financial year whose cost is less than Rs 40 Lakh and if loan amt is less than Rs 25.00 lakh then you can get tax benefit.


Jitesh asked, Can an individual / HUF invest in NSC Bonds & PPF, at the same time, in same Financial Year ? 
Gaurav Mashruwala answers, An Individual and HUF can invest in NSC as well as PPF in same financial year.


Montu asked, How much percentage of income should I allocate to speculation. I want to repay my home loan and have some amount spare but I want to repay the full loan in about 3 years time from now so I need to speculate aggressively. Kindly guide.
Gaurav Mashruwala answers, Do not speculate.


ss asked, Hi Gaurav, Can you give me the mantra of wealth creation and how do I check health of my financial? 
Gaurav Mashruwala answers, Earn - Save - Spend.


dinesh asked, are debt funds nobetter now as compared to FDs
Gaurav Mashruwala answers, While DDT on debt funds have gone up, if you opt for growth option of debt funds you are better off as long term capital gains tax after a year is 10% w/out indexation or 20% with indexation. FD is taxable depending on your income tax bracket.


HB asked, I wish to invest 7 to 10 lac with the horizon of 4-5 yrs...Please suggest which one is best a) SIP , B) PPF C) EQUITY D) GOLD E)LAND IN TIER
Gaurav Mashruwala answers, For a 4 to 5 year period combination of SIP in equity and debt fund is good option. You can also consider SIP in Gold. No point investing in land for 4 years.


ss asked, Hi Gaurav, how do I rebalance my portfolio if my life goals keep on changing? 
Gaurav Mashruwala answers, If your financial goals are within next 2/3 years invest in debt based instruments. If goals are 7/9 years away invest in equity based instruments. For interim period make combination of both.


Ckhan asked, Is it a good time to enter into equities now?
Gaurav Mashruwala answers, For financial goals 7/9 years away equity is an optimum asset class irrespective of market level.


sanjeev asked, if one is having ppf account for himself and spouse in each of which 50,000 is being deposited annually ,is nps still advisable?
Gaurav Mashruwala answers, Depends what is the purpose of investing in NPS. You may want to consider investing in PPF and also invest in index mutual fund scheme. It will give you similar combination of NPS.


vip asked, dear sir, my father is retiring next year. he wants to get 20000/month. so where and how many should invest without any risk? like post monthly income and other like that...thanx in advance
Gaurav Mashruwala answers, I would suggest start recurring deposit in bank. Once he retires use the corpus to invest in Senior Citizen Saving Scheme.


NAYAR asked, I am an NRI working in the Gulf for the last few decades and intend to go back to India next year. What tax palanning guidelines and pitfalls should NRI's like us avoid. Could you please give some guidance?
Gaurav Mashruwala answers, This dependent on your income and classes of assets you hold. As long as you adhere to law of land there aren't any major pitfalls in this country.


Tanya asked, I am earning 27000 per month. I am female single and 23 years old in Gurgaon. How much should I be saving ? 
Gaurav Mashruwala answers, Save as much as possible :-) However if there are no dependent parents or if you are living with family at least aim for 50%/60% of income for savings. Do you have health insurance?


AAL asked, Hello Gaurav, i am planning to buy a home. Can you tell me, how much home loan should i take? I mean 60% of the total amount or more or less?
Gaurav Mashruwala answers, Keep in mind 2 parameters (1) as far as possible your EMI should not be more than 45% of your income (2) your loan should not be more than 50% of your overall assets including new home. Having said that if it is double income family you may go little more aggressive on borrowing.


arunnandaa1981@redifmail.com asked, Will it be a wise concept to invest in ULIP now? 
Gaurav Mashruwala answers, ULIP is an expensive investment avenue and hence refrain from it.


shh asked, Hi Gaurav, I invested NSC every month 6 years back; now all are getiing matured every month. Do i need to declare the interest earned on those in Taxable income?
Gaurav Mashruwala answers, Yes. interest earned from NSC is taxable based on your tax rate.


sundar asked, no one can be a master in equities, stock picking; How can a learner pick stocks? what are the necessary things needs to be taken care while stock picking. 
Gaurav Mashruwala answers, Learn to read balance sheet, follow corporate announcements, read management comments... Both NSE/BSE has several courses for beginners. I think even NISM has some curriculum.


RathnaKr asked, is it advisable to have LIC jeevan sugam policy or to any Bank FD? 
Gaurav Mashruwala answers, You can't compare two. One is insurance second is investment. If you are seeking investment consider FD.


FRANCIS asked, What is your say on ULIP. Should one exit or continue paying annual premium
Gaurav Mashruwala answers, Depends how many years you have paid premium. At some point soon consider exiting...


medha asked, Is it importatnt to have any life insurance other than a term plan?
Gaurav Mashruwala answers, Term plan is the purest form of life insurance.


InVeStEr asked, Should I buy gold coins or ETF?
Gaurav Mashruwala answers, From investment perspective GOLD ETF is better option.


yk asked, Dear sir, I would be highly obliged if you can tell me some retirement based saving instrument.I am 30 yrs old. Plz tell me , where i could invest to fetch 30 Lac when i am 60 plus age.thank you
Gaurav Mashruwala answers, It is not necessary to invest in retirement plan to create old age corpus. You can also invest in simple mutual fund scheme and ear-mark for retirement. As long as you do not use the corpus for anything else but retirement you are fine.


Namesake asked, I have a seven year old Ulip. My returns are lower than the money I have invested. Should I withdraw from it and invest the money somewhere else?
Gaurav Mashruwala answers, Do an overall analysis but in most instances you will be better off withdrawing it.


zeena asked, What is your advice on investing in gold?
Gaurav Mashruwala answers, Consider your financial first rather then market situation. All portfolios should have some amount of gold.


sandy123 asked, Investing money in property is benefecial?
Gaurav Mashruwala answers, Property is illiquid, indivisible asset. While it does give good returns in long, you need to keep in mind your funds requirements before investing.


Naman asked, Why all financial planners are against ULIPs, sir?
Gaurav Mashruwala answers, Expenses charged by ULIP are high. These are charged from premium paid by policy holders. These expenses dent immediate and even long term returns. Also once invested if you opt to withdraw the dent is more severe. This means ULIP does not have enough flexibility.


Sanju asked, I am 27 year old and single. I invest regularly. Do I need life insurance? My monthly salary is Rs 43,000. 
Gaurav Mashruwala answers, If you do not have any dependents you do NOT need life insurance for time being. However in future once you get married and have family, there would be dependents and hence it is prudent to take term plan with small cover now.


Maneet asked, I earn Rs 80,000 every month. How do I choose between a debt fund and fixed deposit. Which is right for me?
Gaurav Mashruwala answers, What is the purpose. Tax implication of both are almost similar with revised DDT rate. However DEBT mutual fund will give you more liquidity.


Neel asked, Will home loans become cheaper? Is it the right time to buy a flat?
Gaurav Mashruwala answers, Home loan rate may come down if RBI cuts rates. However if you need house to live in then you may consider searching for house soon.


pramod2013 asked, Hi Gaurav, I am 40 year old living pune. My monthly income is 30 thousand Rs/month. I am investing Thru SIP 5000/month in HDFC Equity growth & HDFC Top 200 since 15 months is it sufficient or u may suggest any other plan. My goal is 2BHK in pune @ 30 lacs & 50 lacs after 10-15 year. l. Gude me
Gaurav Mashruwala answers, If you can enhance your contribution then kindly do so.


Reets asked, My husband and I just got a baby. We are already worried about her future. Is it a good idea to SIP in an equity diversified fund the next 15 - 16 years? Will this one investment help?
Gaurav Mashruwala answers, Sure please invest in equity mutual fund through SIP and do not get worried about baby's future. God will look after her. Have wonderful parenthood. God bless you all.


abhi asked, is investment in land or realestate project better than any mutual fund or equity investment?
Gaurav Mashruwala answers, Depends. Land and real estate is illiquid while equity investment are liquid. You cannot compare two.


sandy123 asked, Pls let me know where to invest money?
Gaurav Mashruwala answers, Here is thumb rule (1) Create contingency fund (2) Health insurance (3) Life insurance if you have dependents (4) Pay off loans if any (5) For goals greater than 7/9 years equity or equity mf ---- For goals within 2/3 years debt or debt mf. Also have gold in portfolio.


mukesh asked, BSE has a training institute in Pune ? Have you heard of this ? Is training important before trading & investing ?
Gaurav Mashruwala answers, No iead about BSE training institute in Pune. Check on their web site. It is advisable to have knowledge about investing before getting into direct equity.


Hari asked, Hi, I am looking out for Financial Advisor or Financial Planner can you give me the reference of Financial Advisor's
Gaurav Mashruwala answers, Check out on the web site of Financial Planning Standard Board.


pratik asked, I want to invest in mutual funds , I am fairly new to it. Which is best fund i can invest through SIP of Rs.5000 , one for long , Rs.5000 for short term 
Gaurav Mashruwala answers, For long term - 7/9 years choose equity mutual fund schemes. If you are new to mutual fund opt for index funds. For short term 2/3 years, choose debt base mutual fund. For interim period make combination of two.


ayush88 asked, sir, my query is still unsolved.... Sir, pls suggest me good lic policy for me n my family future. My age is 25 single, and I am the only son to my retired parents. And I m only earning person. In my family My parents and me….only three persons are there. Pls suggest such lic policy which secure my parents life if in case m not alive and also fetch good return at time of my retirement. I can invest 10-15k per year. 
Gaurav Mashruwala answers, Opt for TERM plan. All insurance companies will have term plan. LIC term plans are Jeevan Anmol. Amulya Jeevan. They may have more. Also check out other insurance companies.


ayush88 asked, sir, my query is still unsolved.... Sir, pls suggest me good lic policy for me n my family future. My age is 25 single, and I am the only son to my retired parents. And I m only earning person. In my family My parents and me….only three persons are there. Pls suggest such lic policy which secure my parents life if in case m not alive and also fetch good return at time of my retirement. I can invest 10-15k per year. 
Gaurav Mashruwala answers, Opt for TERM plan. All insurance companies will have term plan. LIC term plans are Jeevan Anmol. Amulya Jeevan. They may have more. Also check out other insurance companies.


Pritam asked, If I buy a holiday home on outskirts of Delhi, can I consider it as an investment?
Gaurav Mashruwala answers, Holiday home is for you to visit during Holidays. It cannot be called investment unless you are going to rent it out. However rent does not give good returns.


sixtynine asked, Sir, seek your advice desperately on debt. I have credit card outstanding of Rs 1.5 lakh. I earn Rs 45,000 every month. Please suggest me few tips to retire this quickly. Pls sir. I will be glad if you would help.
Gaurav Mashruwala answers, Cut down expenses, also check if you have assets which can be liquidated.


vishu asked, sir..I m 28 yrs single boy & my monthly take home salary is 40000 rs & i expect avg 8% increment every yr.my parents live in their own house in MP .I am planning to buy a flat costing 3400000.As far as savings r considered I hv 2 LIC worth 28000 rs each & 2 pension plans 12000 rs each yrly paid. Should I go for the flat & how much loan would i get or should take ??? I live in rented flat currently. Plz help.
Gaurav Mashruwala answers, You have not mentioned which city you live in. With monthly salary of Rs 40,000.00 you will be able to get loan of about Rs 18/20 lakh if it is stable job.


Kotak asked, Should I invest in ETF or other equity mutual fund.
Gaurav Mashruwala answers, ETF cost less and hence preferred option.


sandeep10 asked, How we should build the finance portfoloio? 
Gaurav Mashruwala answers, Make list of financial goals. Based on goals create (i) Contingency fund (ii) Purchase health insurance (iii) life insurance (iv) repay loans (v) start investing.


Naman asked, Yeah, even I want to know if it makes sense to invest in NPS.
Gaurav Mashruwala answers, Currently NPS is not very good proposition. However over a period of time there will be many positive developments.


EKRAMUL HAQUE asked, I want invest per month where I invest pl. suggest which co. MF & equity sheare that co. not invest his capital in banking sector & wine co.
Gaurav Mashruwala answers, Difficult to gauge portfolio of mutual funds over a period of time. Goldman Sachs mutual fund (erstwhile Bankmark Mutual Fund) use to have Shariah Compliant ETF. Check if it is still available.


bibek asked, Dear sir may i go for SIP,RD or PPF if my earning is 25 k per month.I want to grow my money faster
Gaurav Mashruwala answers, If you are considering investing for more then 7/9 years opt for equity mutual fund.


wilfred asked, Sir,Please advise your charges for a CFP for the first year and then follow-up charges from the following year
Gaurav Mashruwala answers, I would refrain from marketing my services on this platform. This platform is to solve queries of rediff. You may want to log on to my web site.