When the global financial sector is in turmoil, is it safe to invest in mutual funds?
If so, which funds to invest in? How to evaluate the best best mutual fund?
In an hour-long chat on rediff.com on Wednesday, financial planning expert Vinay Mahajan offered some valuable tips. Here is the transcript:
Vinay Mahajan says, Hello Friends, Welcome to this Chat Session.
dii asked, Hi, This question is really being hitting my mind all the time. whether to invest in stocks or MF. Please through some light.
Vinay Mahajan answers, at 2012-06-06 16:04:45Hi Dii, As an asset class both are same, if you are thinking about investing in Equity Mutual Fund. However, it is recommended to invest through Mutual Fund looking at the objective of the fund and risk associated and asset allocation.
Juhi asked, Hi, Good Afternoon. I have invested in 9 Mutual Funds (DSP Top 100, DSP Equity, HDFC Prudence, HDFC Top 200, Fidelity Tax, Reliance Regular Savings, ICICI Pru discovery, IDFC Small & Mid cap, Sundaram Tax). I want to trim this to just about 4 funds. However, with the current market situation most of the above funds are in RED. Does it make sense to withdraw from one fund to another at this point of time or should i wait till the market improves please. Thanks
Vinay Mahajan answers, Hi Juhi, You are right, you need to consolidate your portfolio else to many funds would mimick index fund. in present market conditions it is advisable to continue in these funds if you are looking for good returns in the longer run.
hasan asked, dii- u shud invest in stocks only if u know tech analysis and read some balace sheets.. plus u need to watch ur portfolio regularly with mfs managers do it for u
Vinay Mahajan answers, Hi Hasan, Technical Analysis is used for trading purpose, that is for intra-day or positional trades, which is done using targets and strict stop losses. For investment purpose we should look at companies fundamentals and therefore we should watch for companies financials. With regard to updating portfolio its a must to review it regularly. As underlying story / fundamentals may change or investment objectives may differ.
raj asked, fund managers in india are useless
Vinay Mahajan answers, Hi Raj, Fund Managers task is to meet stated objective of the funds. For eg. a Fund Manager, managing index fund would try to replicate performance of an index for you as an investor therefore decision point would be to select which fund / funds meet your investment objectives.
harsha asked, which is the best MF currently?
Vinay Mahajan answers, Hi Harsha, Investment should be done according to investment objective and keeping asset allocation in mind. Therefore funds which suits your requirement would be the best fund.
sudha asked, generally it is said that long term inv is good ,what exactly is long term ,how many months /years is it
Vinay Mahajan answers, Hi Sudha, It depends on the asset class that you are investing in. With regards to the equity market, in general 5 years and above is considered as a long term. However, it depends on sectors and economic cycle which can extend or reduce a time period to a bit.
vijay asked, hi sir, can tell me one can u tell me any one stock like if i invest 1L in perticular stock, v should get 1L dividend PA after 12 to 15 year apart from our principle amount
Vinay Mahajan answers, Hi Vijay, Would suggest you to explore Mutual Funds with dividend trigger option. Please refer the scheme details.
Pandit asked, I have SIPs in Reliance banking,Reliance Pharma,SBI FMCG,UTI Dividend yield,HDFC TOP 200,Reliance Growth,IDFC Premier Equity,Religare Contra for 3 years time horizon.Comment please.
Vinay Mahajan answers, Hi Pandit, At present SIP is a better option to create wealth in the longer run. You may continue however asses your goals keeping asset allocation in mind.
raj121 asked, I am investing in mf namely relaince banking and reliance regular saving scheme via SIP. Pl let me know if I will continue or switch them to relaince equity opprtunities and continue the Sip in reliance equity opportunities
Vinay Mahajan answers, Hi Raj, Define your investment objectives first then decide about investment vehicle. It is recommended to invest in large cap diversified funds than sectoral/thematic funds.
nag asked, hi sir, m earning 9500 per month but i dont know where i can save
Vinay Mahajan answers, Hi Nag, The God is in retail. Analyze in detail you expense pattern. With this you would be able to identify where you can save more. This could be either by curtailing expenses or by cheaper subsitution. However, saving alone is not sufficient, keep investing systematically.
raj121 asked, is investing in gold funds through MF a good option these days or not? Pl suggest
Vinay Mahajan answers, Dear Raj, There are various ways to invest in Gold. 1. Direct buying from exchanges (Spot Exchange/MCX), 2. Buying Gold ETF's, 3. Buying Gold Funds. Based on convenience any of the above options can be selected. For a retail investor ETF could be one of the better options in terms of ease and understanding.
rajesh asked, i want to invest in ELSS sip.. could you tell me in which fund should i invest?
Vinay Mahajan answers, Dear Rajesh, It is recommended to buy ELSS in lumpsum than SIP.
Gopal asked, Is ETF the best investment option now?
Vinay Mahajan answers, Dear Gopal, ETF tracks underlying in most efficient way. Provided liquidity is there, it could be one of the better options. Do keep in mind, underlying.
Rajk asked, I have various MF SIPs in dividend options and last year i stopped all of them and changed to growth option, can i transfer those existing divident option funds to growth option of the same MF company.
Vinay Mahajan answers, Hi Rajk, Yes you can. However, be clear about your investment objectives. Taking the dividend out indicates a kind of profit booking. And growth options keep fund invested. Therefore just weigh the options before you decide.
krishna asked, PIYUSH, NO TAX BENIFIT ON GOLD ETFs
Vinay Mahajan answers, Hi Krishna, You get benefit of Wealth Tax & long term capital gain tax.
sai asked, what is the safe maximum and minimum to invest in MF and in how many.
Vinay Mahajan answers, Hi Sai, Investments come with underlying risk so its prudent to asses risk before investing. When it comes to create wealth and planning for a financial goal there is no limit for investing through mutual fund. With regards to no. of mutual fund to many funds would behave like index funds.
murali asked, Hello sir, i have invested more than 2lakh in last 1 year reliance Mf, which time is better for redemption
Vinay Mahajan answers, Hi Murli, Exit is equally important as entry. However it is difficult to time the market. For an investment it is better to align it with financial objectives. Keep the funds for a longer tenure unless you require money for specific goals.
anish asked, hello sir, iwant to start trading, but have no dea so pls. suggest me
Vinay Mahajan answers, Hi Anish, You need to define objective first. While trading you need to be very specific with regards to target price and strict stop loss. Trading appears to be easy, however it is difficult to implement stop losses. If you are new to the equity market it is recommended to invest through Mutual Funds.
venkateswaran asked, Hello sir, I have been investing in some top class mutual funds like HDFC top 200, HDFC equity, IDFC Premier equity, Quantum Long term equity, DSPBR top 100 etc for the last 2 years. I am nearing my retirement. Have not seen any improvement in the NAV in any of these schemes. Pls suggest should I continue till my retirement(Dec 2012) or switch over to other debts like FDs, FMPs etc. for regular returns after retirement.
Vinay Mahajan answers, Hi Venkateswaran, Retirement planning requires more serious thoughts and needs to be planned holistically. It is suggested that towards the goal asset allocation should be more towards Fixed income / Money Market funds.
satish asked, Dear sir Which sector you prefer most to one should invest over long term 5-6 years.
Vinay Mahajan answers, Hi Satish, In the longer run it is recommended to invest in Large Cap Diversified Equity Fund. Alternatively you can create your own fund through investing in equity markets in large cap stocks.
sahil asked, my objective are to (a) have something around 1 crore after 25 years (b) get perodically some amount. i can invest something around 10000 per month, which type of portfolio i should have
Vinay Mahajan answers, Hi Sahil, You did first thing right by setting the objectives. 25 yrs is a long period which will give you benefits of compounding as well. Invest in Large Cap Diversified Equity Funds systematically.
chand asked, is it good time to buy stocks now?
Vinay Mahajan answers, Hi Chand, Define your investmen objectives, any time is right time to invest in stock markets provided investments are for a longer term and investment is done in good large cap stocks.
Raviraj asked, My Name is Raveeraaj, 35 years old, married, staying in THANE, near Mumbai. I am working with Pvt. Ltd company and my CTC is 5.50pa, my wife is also working in pvt.ltd company and her CTC is 1.5pa. we have 3 years old daughter. Here I have mentioned all my YEARLY investments, I want your advice whether my investments are in right shape or require some correction. LIC Policy Name Amount Jeevan Anand 5277 Jeevan Mitra 5156 Jeevan Saral 42876 Total 53309 ULIP Name Amount TATA AIG Lakshya Plus 24000 HDFC Youngstar Supreme Suvidha 15000 Total 39000 Investment Physical Gold 24000
Vinay Mahajan answers, Hi Ravi, It is important to define financial goals and then quantify them. Based on your risk apetite then decide asset allocation, post that only you decide about the products through which your financial goals would be met. It is suggested to follow the process and then asses whether above investment would be able to meet financial goals or you need to make more investments.
Vinay Mahajan says, Thanks you friends...it was nice chatting you all. Will see you soon. Happy Investing!!!