Are 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 on Thursday, financial planning expert Sailesh Multani offered some valuable tips. Here is the transcript:
Sailesh says, Hi, goodafternoon and welcome to this chat session
vijay asked, hi can u tel about SIP investment?
Sailesh answers, at 2010-06-17 12:54:12Hi, SIP stands for Systematic Investment Plan. This is a style of investment wherein a fixed amount of money is invested in a particular fund on a specified date. The money is automatically debited from the investor's bank account. SIP does away with the botheration of timing the market as the money is compulsorily invested into the fund on the specified date. It also makes the investor more disciplined. SIP also helps in averaging the cost of units over the long term as units are purchased at various levels of market.
RKG asked, Sir,My MOM is retired just.How can we invest her money.We got around 9L for her. Pl.tell
Sailesh answers, Hi, since your mother is now retired, capital protection should be your first priority followed by returns. I would recommend that you park 85% of Rs 9 lakhs into bank FD or Post Office Monthly Income Scheme and the balance 15% in equity. If she is a senior citizen then she can invest 85% in 9% Senior Citizens's Savings Scheme and balance in equity funds.
ranjita asked, Investment In MIP can be withdrawn any time whenever required.In that case what will be the impact.
Sailesh answers, Hi, MIPs are liquid i.e. you can redeem them within 24 hours. A lot of funds these days stipulate an exit load of as high as 1% if the units are redeemed within 1 year of investment. If you are planning to redeem, please check if your units will be subject to any exit load. Also, if the redemption is done within 12 months, any appreciation in the NAV will be treated as short term capital gains which will be clubbed with your other income earned during the year and charged to tax at the applicable slabs.
RAS asked, Is it a good time to stay away from stock market & to invest after a cosolidation or market will reach to new highs
Sailesh answers, Hi, if you are a long term investor with investment horizon of 5 years and more and believe in the fundamentals of Indian economy then investing in equity markets at current levels make a lot of sense. Equity markets are by very nature volatile. Domestic and global news flow will keep taking the market up and down. As long as you are invested in fundamentally sound companies or well managed diversified equity funds, you should expect a return of 15% p.a. over 5 years.
RAS asked, What are the sectors in which one should invest ? Is it a good time to invest in gold ?
Sailesh answers, Hi, I am not a sector specialist. So, can specify which sector will do well. I recommend that investors invest in well managed diversified equity funds and leave the sector selection to professional fund managers. Funds like HDFC Equity Fund and DSP BR Equity can be considered as a part of core portfolio. Gold is a good investment from diversification point of view. 10-15% of your portfolio should be allocated to gold. Treat gold as a hedge against inflation. do not try to trade in gold. At current levels you can add some gold to your portfolio. do not rush in to buy gold. Stagger your purchase over 6 months.
Nilesh asked, Hi....... I currently working with MNC company with annual income nearly 3 Lakhs.....which is the best way to invest money for 2 to 3 years.
Sailesh answers, hi, for 2-3 years the best investment would be balanced funds. These funds invest 65% and more of the portfolio in equity and the rest in debt. you can consider fund like HDFC Prudence and DSP Balanced Fund for your portfolio.
Venkat asked, What are the investment options available? From High Risk to Low Risk ..and also the recommended percentage to invest in High Risk and Low Risk
Sailesh answers, hi, high risk investments include equity and real estate. If you are young then consider higher allocation to these assset classes. The thumb rule is 100 minus your age should be allocated to equity and the balance to debt. Debt investment like NSC, Bonds, FDs come in the low risk category. Even gold can be considered in the low risk category.
Subhash asked, I have spend Rs.300,000 in TATA AIG but the growth is on Rs. 12,000 after 3 years. Wat should I do withthis amount for better growth.
Sailesh answers, hi, it seems you have take an ULIP. ULIPs are very high on the cost side. As much as 15%-20% is deducated from your premium in the first 3 years of your investment. Hence, you will find the value of your fund to be below prchase price. Typically ULIPs take 7-8 years to break even. Hence, you are advised to continue with your ULIPs till you make some money. surrendering at a loss doesnt make any sense.
harshal asked, DO U THINK IN DIREC TAX CODE ELSS SCHEME WILL BE REMOVED UNDER 80CC
Sailesh answers, Hi, it is likely that ELSS and few other tax saving schemes currently available under section 80C will not be available under the new tax laws. There will be one more round of discussion before the DTC is finalised.
Rakesh asked, I started investing in stocks about 8 months ago, haven't had much luck in-terms of returns What advise do you have about picking the right stocks for long term?
Sailesh answers, hi, since you have mentioned the word long term, 8 months is by no means a long term period. Long term for equity investment typically means 5 years and more. I would advise you to have patience. If you are invested in fundamentally sound companies with solid business model and growth potential, then there is nothing to worry. Also, it would be better if you get you portfolio checked through a competent portfolio manager.
RKJ asked, Invest in Short Term, which is better option
Sailesh answers, hi, if your investment horizon is less than a year then bank FD is the best. you can even consider investing in liquid or liquid plus funds. for investment horizon of upto 24 months you can consider investing in Monthly Income Plans (MIPs). MIPs invest 15-25% in equity and balance in debt.
ajay asked, have SIP l of 5000 each in HDFC Top 200, Rel Power, ICICI infras, Kotak 30 and 50K in ICICI Focused Equity, any suggestions?
Sailesh answers, hi, except for HDFC Top 200, I would advise you to redeem all other funds. You have sectoral and thematic funds in your portfolio. these are not all season funds. These will do well only when the unerlying sectors that form a particular theme will do well. Invest in well managed diversified equity funds.
ady asked, Dear Sir, I am a NRI guy. I have made my 70% investment in equeties and property. But want to keep some money in fixed income instruments. As FD is giving very less return to NRI's. Kindly suggest some safe option.
Sailesh answers, hi, there is no safe investment better than bank FD. Since you have already made investment in high risk assets like equity and real estate, it makes sense to have safe investment in the form of FD in your portfolio. safety of capital should be your priority compared to returns. Invest in a 6 month FD. Rates are likely to move in a quarter or two.
amit asked, investing in ipo is trustworthy or not??? whts d possibility chances??? i want 2 begin wid 3000 or somethng like tht
Sailesh answers, hi, I am not a fan of IPO investment. You money gets locked in and you are not even sure of allotement. If there is an opportunity in the secondary market in the meanwhile, you are sure to miss it for lack of funds. Retail investors hardly make money in IPOs. since you are starting with Rs. 3,000 the best option is to start an SIP in 3 equity funds. Consider funds like HDFC Top 200 Fund, DSP BR Equity Fund and Fidelity Equity Fund
Mustufa asked, Hello Sir, I have just started my career.. My CTC is 3.5 lac per annum... I m new to investing..My first goal is to Buy a new house.. I have abt 5 lac in my bank Ac..How should I go abt investing. M 23 yrs old..
Sailesh answers, hi, by when do you want to buy the house? if its less than 3 years, then invest everything into bank FD. If its 5 years away invest 70% of your savings into bank FD and the balance in equity funds.
PRAFUL asked, sir my age is 29 & earning per month 25000/- & there is no liability on my had. & i am going to become father. I wnat to start planning for my child for his/her future so SIP is best option or what? I have insurnace policy together my wife total sum assured is Rs. 1500000/- & my term plan is of Rs. 1000000/- additional so now i can invest per month from today 2000/- [p.m. still so pl suggest best option for my kid future
Sailesh answers, hi, the best approach would be to start investing in diversified equity funds for your child's future. Your main expenditure will be on education and marriage. Since your investment horizon is more than 15 years, equity funds are ideal for you. Please do not take and child specific insurance plans to plan for your child's future. Insurance should be taken only by workng parents. As far as insurance is concerned only Term Plans are the best. It offers you higher sum assured for relatively lower premium.
Ani asked, is invest in gold etf is less risk
Sailesh answers, hi, every unit of GOld ETF is backed by 1/2 or 1 gm of gold. Gold ETF tracks the gold price. the price of ETF will vary in line with the price of gold. The gold held by ETFs is the purest form of gold. the information is disclosed by the fund house in the monthly factsheet.
sunriz asked, Hi Shailesh Could you help me out Best MF one for Tax Savings and other for growth
Sailesh answers, hi, in the ELSS category I recommend Fidelity Tax Advantage and Franklin India Taxshield.
R.A.N.D.I. asked, Hi, I am investing in SIP p.m. Rs. 25K in HDFC Top 200, HDFC Eq, Rel RSF, Rel Gr, Rel Pharma, Sundaram Sel Focus & Sel Midcap, ICICI Pru Discovery, IDFC Prem. Eq, Tata Life & Sci all in growth option. My Time horizon is over next 20 ye Hi, I am investing in SIP p.m. Rs. 25K in HDFC Top 200, HDFC Eq, Rel RSF, Rel Gr, Rel Pharma, Sundaram Sel Focus & Sel Midcap, ICICI Pru Discovery, IDFC Prem. Eq, Tata Life & Sci all in growth option. My Time horizon is over next 20 ye
Sailesh answers, hi, the list is tooo long! Request you to mail it to me separately at firstname.lastname@example.org
rajaryan asked, i would like to know which mutual funds i can opt for with a 2 year horizon. I want to invest around 50000.ALso can you suggest mutual funds which give fixed returns in addition to insurance cover after some years.
Sailesh answers, hi, the best investment for 2 years would be an MIP. I would recommend HDFc MIP - Long Term plan. this fund invests 75% in debt and balance in stocks.
Antara asked, I need monthly income of Rs 25000 after 10 years. Please suggest suitable plan.
Sailesh answers, hi, for how many years will you need this monthly income of Rs 25000. Also, do you want to factor in inflation? Mail me the details separately.
RaviHarsha asked, Hi, please suggest some good educational plans to build a corpus fund of 50 Lakhs in next 16-18 years for my kids.
Sailesh answers, hi, to build an education corpus you need to start investing in equity funds. you can take the SIP or Lumsum route, whichever you are comfortable with. Aim for an average return of 10% over the 16-18 years. This is because as you near your goal you will have to start investing more in safer assets like Bank FDs. Children specific insurance plans are not recommended.
unmesh asked, I need to save money for marriage and am planning to get married in year...looking for some investment, either mutual funds or FD, but i dont want to lose money on my invested capital and need to take the money out in a years time when needed
Sailesh answers, hi, since you will need the money for sure after a year you need to park the money either in liquid fund or bank FD. Equity or balance funds are a strict no no.
KAILASH asked, i am having 3lacks. kindly give me suggesstion for monthly income scheme
Sailesh answers, hi, you can consider investing in Post Office Monthly Income Scheme (POMIS). HDFC Ltd Fixed Deposit too has a monthhly income plan. You can visit www.hdfc.com for more details.
ajay asked, I have savings of 20 Lacs in SB which is thesafest and best returns option?
Sailesh answers, hi, the safest option would be Bank FD. If you want to take some risk then MIPs are the best. Next comes Balanced fund. As you go up the ladder of risk chances of earing best return improves. But be aware that taking higher risk does not necessarily mean higher return.
Pushpender asked, Hi Shailesh, I like to invest in mutual funds for 3 yrs. I have choosen Reliance Pharma-Growth, HDFC Prudence, SBI PSU fund and DSP midcap fund. Like to invest in these 4 fund 4000/pm equally. Is they are good funds to invest for long term
Sailesh answers, hi, except for HDFC Prudence. I would not recommend any scheme you have chosen. You should invest in diversified equity funds. What you have chosen are thematic funds. consider funds like HDFC Top 200, Fidelity Equity Fund and DSP BR Equity Fund instead.
digno asked, Hi, I am going to take home loan of Rs.5.6 lacs, my take home salary is 29k. Is it wise to take home loan & then invest in real estate in Mumbai?
Sailesh answers, hi, if you are buying a house to live in then it makes sense to take a home loan. But if its purely for investment purpose then I would not recommend buying a house on loan given the price of Real Estate in Mumbai. I personally expect that its a big bubble that can burst anytime.
samkjai asked, Hi, my parents (aged 67 yrs),not working any more and have no pension policy in hand,are having a corpus of 15 lacs. Tell me where they should nvest to have maximum gain out of their corpus.
Sailesh answers, hi, the best option is to invest in 9% Senior Citizen Savings Scheme. the interest is payable every quarter and the maximum investment that can me made is Rs 15 lakhs. This is a perfect investment for your parents. go to any SBI branch and they will give you more details
RD asked, I am 45 years old with 2 sons and wife. I have Mediclaim from my Company where I am working and it covers my family adequately. How do I plan for Medical expenses of my family when I retire after 15 years?
Sailesh answers, hi, the only thing you can do is to take a medical insurance once ou have rtired. Also, try and build a medical contingency fund, large enough to meet any high unforseen medical cost.
aradhya asked, Hi Sailesh i have started investing in Gold Benchmark ETF. can you please suggest me the time frame for which i should carry on this investment.
Sailesh answers, hi, ideally your investment in Gold should not be more than 10-15% of your total portfolio. If you have reached that level then stop adding gold to your portfolio. If you are yet to complete the target, then add gold on every dip. Buy gold from insurance point of view and notfor trading
ssksingh asked, which is best mutual fund to invest.
Sailesh answers, hi, there is not such fund as a best mutual fund. Invest in fund that suits your investment objective, investment horizon and risk profile. As far as equity funds are concerned, you can consider adding funds like HDFC Top 200 Fund, Franklin India Bluechip Fund, DSP BR Equity Fund and Fidelity Equity Fund to your portfolio
bk asked, is putting rs 2000 pm in gold etf for next 20years a good option. this will be an investment for my daughter marrige. which gold etf is best.
Sailesh answers, hi, you have chosen the best way of building your daughter's marraige corpus. What you can do is keep buying units of Gold ETF at regular intervals. When your daughter is about to get married, you can sell the units of Gold ETF and buy physical gold with the same. you can invest in Benchmark Gold ETF
sachinw asked, Hi Sailesh, I want to withdraw few MF's. Already completed 4 years. What is the process? Pl advice
Sailesh answers, hi, you need to fill in the redemption slip attached to the statement of account. Sign the slip and submit to the registrar or at the fund house's office.
sanjay asked, okay let me ask this : Suppose I am investing in Mf and malrket goes to 22k and fall back to 19k by that time my sip time is over. I am looser . How to deal with this situation ? also is it good to stop sip if nav is not moving ?
Sailesh answers, hi, the scenario you have mentioned is likely to happen. But that doesnt mean that markets will never go past the 22k level. you are assuming here that markets once they touch 22k will keep going down. Equity investment is for long term investors. So dont worry about short term volatility. also, dont stop SIP because the market is falling... it works against you. If the NAV is not moving then check the portfolio of the fund. If the fund has not invested in fundamentally strong companies then it makes sense to exit the same. Check with a competent investment advisor.
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: email@example.com.