The global financial sector is in turmoil, the Indian markets are volatile. Rupee is going down against the dollar.
The investors are at a loss, they are groping for a solution.
At this juncture, is it safe to invest in mutual funds? If so, which funds to invest in? How to evaluate the best mutual fund?
There is the eternal dilemma -- hold, buy or sell.
And if one opts for 'buy', then which stocks to invest in? Which are the sectors that are likely to remain less volatile?
In an hour-long chat on rediff.com on Wednesday, stock market and investment expert Vinay Mahajan offered some valuable investment tips.
Here is the transcript:
jack asked, hi for a long term view which is better to invest mutual fund or stock with a view for 10 years.
Vinay Mahajan answers, at 2012-06-27 16:05:24Hi Jack, I think you are referring to equity mutual fund. From the long term perspective equity as an asset class outperforms all other asset classes. With respect to you choice it depends on your knowledge level to direct invest in equities otherwise mutual fund is the better route for investing.
SANJAYA asked, Sir how do i choose a good stock to buy in recent times
Vinay Mahajan answers, Hi Sanjana, Equities are better investment in a longer run. It is advisable to select stocks with sustainable Return on Equity and Return on Capital employed more than 20% and low Debt along with this you need to check the quality of the management as well. Alternatively you can opt for large cap diversified equity mutual funds.
rajesh asked, Is it better to lock funds in bank fd since rates are reasonably high
Vinay Mahajan answers, Hi Rajesh, Investment should be a concious decision and it should be part of your overall asset allocation. At the same time you should look at post tax returns. Bank FD's would be a good option as far as convenience is concerned, you may look at corporate fixed deposits, debt mutual funds as an alternate.
sudipto asked, Hello I can invest 5K per month,where should I invest this amount in next 10 years
Vinay Mahajan answers, Hi Sudipto, Its good that horizon is long enough, it is equally important to define the purpose of wealth creation i.e. financial goal. You can select 2-3 good mutual funds and start investing through SIP route.
VIJAY asked, SIR I AM 35 YEARS I SHOULD GO FOR REGULAR SIP OR DIRECT INVETMENT IN MARKET
Vinay Mahajan answers, Hi Vijay, While investing through mutual funds, you avail services of an expert fund manager who invests as per scheme objectives. If you are having expertise of investing on your own, you can invest directly in the market.
Thomas asked, Whether we should invest in blue chips stocks now or in mutual fund. Can u guide us ?
Vinay Mahajan answers, Please refer previous answers.
rskelkar asked, My investment is as follows: Mutual fund through SIP 2000 in IDFC premier equity fund 2000 in principal equity fund 1000 in FT flexi cap fund- growth 1000 in HDFC prudence fund 1000 in HDFC equity fund 1000 in Canara robe co tax saver 1000 in DSP Tax saver fund Recurring in banks and post offices 6000 in post offices recurring 7000 in Bank for 27 months Average returns in mutual fund is around 8% in three funds while the other are having ve returns. While equity market( invested around 4.0 Lakhs) is also giving ve returns. Please give suggestion on my portfolio.
Vinay Mahajan answers, Hi Mr. Kelkar, In present market conditions fund performance is low, however you need to be sure about your investment objectives. Funds in your portfolio are good, just see your overall asset allocation and keep the funds for longer tenure to meet your financial goals.
dayasagar asked, Sir, I want to invest Rs.50,000 in Gold fund. Kindly suggest me suitable one. Thanks and regards/Dayasagar
Vinay Mahajan answers, Hi Dayasagar, There are several options, you can invest in Gold through Gold ETFs listed on stock exchanges or from the spot market (NSEL) or from commodties exchange or in Gold Funds Schemes of Mutual Funds.
Sunil asked, I would like to invest 25K in ICICU Pru Discovery fund and 25K and HDFC Gold Fund, is this the right approach?
Vinay Mahajan answers, Hi Sunil, Define asset allocation, define purpose of the investment i.e. financial goal and investment horizon. Accordingly select funds to invest in.
sanket asked, sir if i start investing 1000 per month in sip which fund i should select for how many years
Vinay Mahajan answers, Hi Sanket, You should start investing your money in large cap equity mutual funds. Some of the good funds are HDFC Equity, DSPBR Top 100, ICICI Pru Top 100 etc. The horizon depends on your financial objectives and if you are investing in equities horizon should be sufficiently longer i.e. atleast 3 years and above.
yogesh1 asked, Having SBI and Reliance UPLI since past 5 years.None of them is in +ve.Please suggest
Vinay Mahajan answers, Hi Yogesh, Performance of the funds might be not that convincing due to present market conditions, but in a long term scenario it is the best opporunity to start investing. Keep financial objectives in mind and revisit your asset allocation accordingly.
milind asked, I like to invest in child savings plan for my second child, I have already invested in ICICI Child care plan growth for my first child. kindly guide.
Vinay Mahajan answers, Dear Milind, It is good that you are planning early for your kid, you also need to clearly define the milestones in terms of your fund requirements at different stages. Some of the examples are Child Education, Higher Studies Abroad, Wedding etc. then decide about the asset allocation you would and investment required today (lumpsum or systematic) keeping in mind inflation. Do asses requirements of protection i.e. insurance.
chandra asked, Hello Sir, I am investing 2k each in HDFC Equity, HDFC Top200, reliance Growth and Tata Equity oppurtunities Fund Plan B from last 18 months. Are my MFs ok to continue or should i switch to another. I am more concerned for Reliance and Tata Funds.
Vinay Mahajan answers, Hi Chandra, Stick to your investment objectives. You may continue with the fund. At the same time please do not get swayed away from the market movements.
RK asked, I am 54 with one son to marry in 2-3 years. I have no significant savings as of now. wish to invest 35-40K per month. please advise the break up in which I should invest in FDR, MF and stocks.
Vinay Mahajan answers, Dear RK, Since the financial goal is close, investment should be into debt funds and towards the goal date. It should be converted into liquid funds/savings bank. On debt fund side you have options to select from corporate fixed deposits, debt mutual funds, FMP's etc.
Juhi asked, Hi, Good Afternoon. I have invested in about 9 Mutual Funds and am planning to trim to about 4 after hearing advises from experts like you. Do I need to wait for the markets to go Green and then revamp portfolio Or can start transferring from one fund to another on any given day. Most of the stocks understanably in Red now. Please advise. Thanks. Juhi
Vinay Mahajan answers, Hi Juhi, To many funds would mimick the index. If you want to churn the portfolio without change in the asset allocation, you can do so. You need to see which funds you are going redeem. You need to closely review sectoral and thematic funds. And increase allocation towards diversified large cap equity funds.
deep asked, please advice for mid/long term investment plan and regular monthly plan like recurring deposit.
Vinay Mahajan answers, Hi Deep, If you horizon is long and if you can take risk, then go for SIP large cap diversified funds or mid-cap funds depending on your risk appetite. You can also do SIP directly in equities as well by selecting good stocks.
vijaydc asked, investing in HDFC PRUDENCE-3000, HDFC ETY-2000, HDFC MIDCAP OPP-1000, DSP 100-2500, RIL GOLD-1500, IDFC PREMIER ETY-2000,HDFC TOP 200-3000.HOW IS MY PORTFOLIO.DO I NEED TO ADD OR REDUCE SOME FUNDS
Vinay Mahajan answers, Hi Vijay, Too many funds would mimick index. It is always preferable to invest in limited funds with good track record. What is more important is asset allocation and financial objective for which investments are being made.
sameer asked, Dear Sir, I am doing SIP in HDFC Top-200 Rs.2000/- HDFC Equity Rs.1000/- DSP BR Top-100 Rs.1000/- DSP-BR Equity Rs.1000/- DSP=BR balanced Rs.500/- Fiedelity equity Rs.2000/- & Frankline India blue chip Rs.2500 total Rs.10,000/- per month is my investment prefect or required changes, Pl guide.
Vinay Mahajan answers, Please refer previous posts.
anup asked, what should be the best option for investment for pension fund mutual funds or equities.
Vinay Mahajan answers, Hi Anup, The first step would be to do holistic retirement planning where you need to assess funds required on recurring basis post retirement. Time horizon available to accumulate that sum and then decide suitable investment vehicle with a discipline investment approach Mutual Funds would be the better option.
bhavik asked, Sir Is the valuation cheap to buy midcap stocks?
Vinay Mahajan answers, Hi Bhavik, Markets are at lower level and valuation is attractive in select mid-cap stocks. However, investment in mid-cap stocks could be risky and your investment horizon has to be long.
pradeep asked, Sir, Good evening im having 3 ques right now, 1) Can i go ahead depositing 5000 / rs in PPF account every month or else please advice me the other instruments. 2) Can i go ahead with SIP of 1000 /- Rs per month in share market at this present scenario of economy? 3) Im earning 40000 / - Rs per month, how much do u i have to save per month is good? If so more then 6000 / - Rs what i mentioned then where can i invest?. Thanks in advance for the answers you provided me.
Vinay Mahajan answers, Hi Pradeep, A prudent investor decides on the savings target first i.e. based on the financial goals you decide on an amount which will be compulsorily invested to acheive those goals and remaining can be spent. Investment in PPF and SIP would depend upon your financial goals and horizon of those financial goals.
Krish asked, Hello Sir, I feel MFs have delivered short on investor expectations. Historically, they are a flawed concept. Am I right?
Vinay Mahajan answers, Dear Krish, Mutual Fund is an excellent way to invest. Depending on the asset allocation and risk appetite one needs to select the right fund.
sudipta asked, Hi, I am 30 yrs old and I am planning to invest in HDFC Top 200 and HDFC Tax saver fund. Should I invest in lumpsum or do it in SIP mode. I have already invested in Fidelity Equity fund, Fidelity India Growth fund and Fidelity Tax advantage fund in SIP mode. Should I continue investing in those funds? Please let me know your views..Also, do you think it is good time to invest in Real estate?
Vinay Mahajan answers, Hi Sudipta, Select of funds is good, but it is advisable to invest in tax saving funds through Lumpsum mode as all the tax saving funds comes with min. locking period.
shiva asked, Now a days which one is safe Equity or MF
Vinay Mahajan answers, Hi Shiva, Returns and Risk go hand in hand. If you expect higher returns in equity you should also be assuming higher risk. If you are looking for safer avenues you should invest in debt instruments with higher ratings.
Vinay Mahajan says, Thanks friends for joining this session. For any of your unanswered queries due to time limitations you can write me on firstname.lastname@example.org. If you share details for creating financial plans for you which may be published in rediff do write to me.