In an hour-long chat on rediff.com on Thursday, Rahul Goel, CEO, Personalfn.com, and financial planning expert, answered readers' queries on tax planning, invetsment, mutual funds, etc. Here is the transcript:
NRS asked, Could you please advice on which mutual funds in india are offering the best returns?
Rahul Goel answers, hi. the most common mistake investors make is to inevst in funds wich have offered the highest return in recent times. however, your fund selection process should be a lot more indepth. to give you an example, the top performer over a year maybe say a technolocgy fund. does this mean that you should put money in it? in our view, no. rather it would depend on whether or not the fund suits your needs and profile. having said that, funds like hdfc equity or franklin flexicap are diversified equity funds which will suit the investor who is looking on taking risk to earn a higher return.
tonu asked, Hi Want to know which SIP is the best. I have invested in SBI infrastructure fund how is it? what you have say about the UTI lifestyle mutual fund?
Rahul Goel answers, regariding uti lifestyle fund, at personalfn, we are recommending to our clients that they avoid the fund. with regards to sbi infr, its again a sector fund. while it may do well in the near term as the hype surrounding the sector persists, over the long term it will go through a cycle, like all sectors. so, if you do not exit in time, then you may not really make the kind of returns you should have. at personalfn, our clients, almost all the times are told to avoid sector funds.
Jayant asked, Dear Sir, I have long term view [12-15 years] and investing 1000/- as SIP for net 3 years in following funds 1) Templton India Equity Income Div Rein 2) Fidelity Equity G 3) Reliance Growth Div Rein 4) Fidelity India Special Situation G 5) Franklin Prima Plus Div Rein kindly comment Jayant Pune
Rahul Goel answers, i think if you have such a long time frame, you should select your funds more carefully. firstly, i think you should simply go in for the growth option as against the dividend option, unless you need this income. secondly, you have funds like templeton equity and fidelity sp situations, which are very good funds, but should not form the core of your long term portfolio. the core should comrise funds like hdfc equity / top 200 and frankin flexicap. i am assuming you can take near term risk and are not looking at speculative investments. in short, you have good funds, but your allocation is not correct. and getting the allocation right is very important in our view.
RTE asked, what are the implications of going in for a 5 year SIP vs extending a 1 year SIP for 5 years ? Does one need to pay entry load when renewing the SIP at the end of previously agreed period ( 1 year)
Rahul Goel answers, there are no significant implications. however, if you do a 5 yr sip do not forget to review the scheme every year. also, sometimes, there are opportunities to do long term opportunities in good schemes at less or nil entry loads. at such times it may help to lock in longer term sips. but make any such investments only if they are in line with your overall asset allocation. do not invest only to save the entry load.
rahul asked, I wanted to invest 3 lakhs for 5 years, pls suggest me some good Mutual funds and pls suggest shall i go for lumsum or SIP
Rahul Goel answers, rahul, hi. i would recommend you go in for a STP - systematic transfer plan. in this case, your money is put into a liquid fund and then transferred to the equity fund of your choice at regular intervals. also, ensure that the STPs are structured in such a way that atleast some money is invested every week. this way you will be able to average out the cost of your investmetn better. regarding the schemes... if you are willing to take on risk, and have a minimum three year investmnt horizon, consider schemes like hdfc equity or franklin flexicap. avoid sector funds and also the NFOs. stick to plain vanilla diversified equity funds.
Vibhor asked, Hi Rahul, i am an associate working for MNCand geting arnd 3.5lacs per annum.... can you suggest me some investment options
Rahul Goel answers, vibhor, hi. ensure that whatever investments you make are in line with your needs. do take term insurance; subsequently, put away as much money as possible in risky assets like equities for the long term. if you are busy with work, for for equity mutual funds. basically, save as much as you can and invest regularly.
NRS asked, what would be your advice on the reliance equity advantage fund?
Rahul Goel answers, reliance equity advantage fund is an NFO which closed recently. our recommendation to our clients at personalfn was to avoid the scheme.
Don asked, Hi I save 20000/month. I plan to buy a flat in pune in a years time. Please suggest me how should i invest my money so that i can have enough money when i am buying a flat.
Rahul Goel answers, don, hi. since your investment horizon is about a year, i recommend you invest in 3 month fixed maturity plans (close ended debt funds) of mutual funds and roll them over as and when maturity happens. do not invest in the stock markets - that would be speculating.
rajicici asked, Sir iam planning to invest an amount of Rs 1000 for a tenure of 3 years through SIP can u suggest which is the best mutual fund that will give me assures returns
Rahul Goel answers, hi. if you are willing to take on risk, then go for the diverified equity funds like hdfc equity, and franklin flexicap. other schemes you can consider are dsp ml equity. then there is the quantum long term equity fund, which does not charge any entry load and has a good performance (Full Disclosure - Quantum Mutual Fund is founded by Ajit Dayal, who has also founded Personalfn). Our view is however completely independent and based on our research.
Prabhu asked, Dear Rahul, I have about Rs 3,00,000 which I would like to invest. I am 44 years old and have a 15-yr-old daughter. I would like to invest for her future. I have no other investments save a couple of insurance policies. I plan to invest for the long term. Could you name a couple of good MFs for me? Will be grateful. Thank you.
Rahul Goel answers, prabhu, hi. i have already named a couple of schemes earlier. before committing monies, pl be sure of the tenure of for which you are investing. if you plan to fund her college education, then you will have to avoid taking on much risk as the tenure of investment will be less than 2 years.
hafiza asked, hi sir, I have an annual salary of 8 lacs pa.could you please suggest me an investment plan. thanks.
Rahul Goel answers, hafiza, hi. its very difficult for me to give you a plan with such limited information. sorry!
monasheth asked, Sir,I have invested as premium in LIC,Aviva Life Insurance,ICICI Prudential Life Insurance and Bajaj Allianz as well as HDFC standard Life Insurance,What should i do for profitability.. for above insurance
Rahul Goel answers, mona, hi. it seems that you are one of the many people who look at insurance as a mode of investment. we differ on this. insurance should be taken for purpose of protection. of course you can invest in ulips, but that should happen once you have made what we call the pure investments - stocks, bonds, real estate etc. in any case, if you wish to make a meaningful return in a ulip, you should be invested for atleast 12 years in our view.
divya asked, Hi Rahul is it better to keep money in Fds or stocks
Rahul Goel answers, divya, hi. fds and stocks are completely different asset classes. one carries assured income and very low risk; the other carries high degree of uncertainty. if you are considering one over the other, it is very likely that you are not sure why you want to invest the money in the first place!
tony asked, what do u suggest is it wise to invest with Uti india lifestyle fund ?
Rahul Goel answers, tony, hi. like i mentioned earlier, we have recommneded to our clients that they avoid this fund.
bhasker asked, dear sir i wolud like to invest short term plan like 3 to 5 year and i have some fund which is in my saving account. please sugges me what should i do write now.
Rahul Goel answers, bhasker, hi. i think you should clearly define why you wish to invest the money... the objective,. once you are clear, then your financial planner should help you build a portoflio best suited to your needs.
Manas asked, Good Afternoon Mr.Rahul. Iam 24 now and am planning to start making investment. I will be doing it for the 1st time......where and how do i make a start
Rahul Goel answers, manas, hi. great that you are starting early! before investing a single rupee do one of the two. one, become an expert on where you should invest the money. or, get yourself an honest financial planner who will guide you. depending on how busy you are you will need to take this call. if you get this right, you will do very well!
Bala asked, Rahul, I have invested in some mutual funds (SIP) on a long term planning. Will i attract any capital gain tax if i redeem some points after one year.
Rahul Goel answers, bala, hi. if you have inevsted in equity funds, and redeem after the "installment" after 12 months, then there will be no incidence of capital gains tax.
vaishalitaday asked, What returns can I expect from Quantum Equity Long Term Fund if I invest Rs. 1L today, in the next five years?
Rahul Goel answers, very difficult to say. at personalfn, our research suggests, that over the next 3 - 5 years, the stock markets could broadly return about 15% pa. however, this return will not be steady, it will definitly be lumpy. if you have invested smartly, you should be able to make this return from risky assets such as the stock markets. the key word here is 'smart'.
rishi asked, hi rahul i have invested 50,000/in icici prudential ulips. which is has to be done for three years.how do think the growth prospects for the same is.
Rahul Goel answers, rishi, hi. i think given the cost strucutre of a ulip, you will have to stay invested for atleast 10 to 12 years to make a return which is comparable with a mutual fund.
MK asked, I am discussing my finances with a financial planner.He is using certain assumptions that I am not certain about. I want to know how should I think about projecting my income and expense growth between now and my retirement. I am 35 and I want to retire when I am 55.
Rahul Goel answers, mk, hi. the idea is not be perfect. debate the assumptions and use what you think is best at this point in time. review every 6 months and change the assumptions in case your views have changed. financial planning is an on going activity. the important thing is to get started and then to review regularly.
karan asked, Can I buy Foreign Mutual Funds directly online using credit card system or does i will need to take any special permission for the same???????
Rahul Goel answers, karan, hi. i think you should speak to your credit card company about the same. seems unlikely though.
vaibhav asked, My question is related to ur acads, I am a IIM L student and want a career in finance,i want to do CFA also. Can u give me some option in finance and how to do CFA in India.
Rahul Goel answers, vaibhav, hi. finance is a very vast field. you will need to think about which aspect of finance you wish to pursue. if you are looking at money management, then a CFA will help.
Sujoy asked, Hi, I am earning only for last 2 years. I never did any mutual fund. I heard it is risky investment for a person like me who does not have much money. What should I do for investment?
Rahul Goel answers, sujoy, hi. equity mutual funds do carry risk. however, the risk has nothing to do with how much money you have. what you need to do is allocate your money depending on your needs. do not worry about the quantum of money. financial planning is not only for people who are wealthly; it should be followed by every one. and then, whatever the action points from the same, execute them. if your financial plan says, invest in equity funds, then you should. of course i am assuming that your financial planner is honest in his advice to you.
divya asked, SIP for 5000 Rs /Pmonth, which one is better ICICI smart kid or Kotak head start . age of kid- 1 yr, hence a horizon could be 12-15 yrs
Rahul Goel answers, divya, hi. have you invested elsewhere for your child. is the ulip the first investment? i would suggest that you take the ulip, but maybe after you have decided what pure assets to buy - like stocks, bonds etc.
krishnakumar asked, I want to invest money Around 100000/-, cud u suggest me where i shud invest to get good return
Rahul Goel answers, krishnakumar, hi. where you should invest would depend on how much risk you can take and what is the tenure you want to inevst for. without this information it is difficult to give you any meaningful recommendation.
elizabeth asked, We have not started to save anything for our 9 yr old daughter. How much should we start saving?
Rahul Goel answers, elizabeth, hi. i think you should start investing now. your daughter has about 8 years to college; that is a good time frame (longer would have been even better!). i suggest you use the education planner on personalfn to get a sense of how much you should save. on personalfn you will also find out where you should possibly invest the monies.
sridmk asked, Hi Rahul, Can you please suggest me if i can continue investing in Sundaram select Midcap, Magnum Global-D in SIPs. I did that for abt an year but haven't got expected returns. Wonder whether I can better utilise the funds in some others fund. If I can, then pls can you suggest some good funds?
Rahul Goel answers, sundaram select midcap is a very good scheme. however, given its tendency to hold cash, it underperforms is a rising market. however, as and when the market corrects, its performance catches up. i think a very small allocation to this scheme is feasible. regarding magnum global, at personalfn, we do not recommend this scheme to our clients for several reasons. one of these being, we prefer diversified equity funds as against thematic or sectoral funds.
Don asked, Hi Rahul, Thanks for your reply. Could you please suggest some good mutual funds with 3 month fixed maturity plans? Also i have investing around 30000 in stocks. should i keep them invested or sell and invest them in mutual funds. (BTW I invested in TCS, Tech Mahindra, RPL) Thanking you.
Rahul Goel answers, hi. your financial planner can guide you on which fmp... these schemes open all the time... since they are open for short periods you will need to plan the investment in advance. regarding stocks, hold them only if you have the time to track them.
Amit asked, Sir, I am planning to invest Rs. 1,00,000 so that i can get exemption from Income tax. I m ready to invest in Mutual Funds, FD's, NSC's PPF etc etc. KIndly advice which will be be the best
Rahul Goel answers, amit, hi. the solution is probably that you will need to have several of these, but in the right allocation. if you have risk appetite, have more tax saving funds.
Milind asked, Hi, I am doing join sotwae industry. Would like to invest around Rs.20000 in Mutual funds for Tax savin. Would like to know which are better MF's available in term of saving Tax and getiing good returns
Rahul Goel answers, milind, hi. among the better funds, in our view, are hdfc long term advantage and frankin india tax sheild.
cipra asked, hi rahul! i am retired from priate sector aged 70. while holding a post-retirement job until recently, i had invested my allretirement benefits amounting to 21 lacs into mutual funds as follows: 12 lacs in debt funds and 9.5 lacs in equity funds. the debt funds have grown to 16 lacs and the equity invetments have doubled. now i need about 20,000 for my living expenses. should i take it by regularly booking profits in the required units from equity funds or shuffle my investments and go for fixed/bank deposits and debt funds (monthly). pl advise.
Rahul Goel answers, i think what you should do is curtail your exposure to the stock markets, especially, if this is the only source of income you have. do not worry about the potential return that you will miss out on. worry about capital protection, which will come from fixed income investmetns. deposits are still offering pertty attractive rates, try and lock them in. however, if you have other assets, then this view may change.
HIten asked, Plz suggest for best SIP for Contra Fund Hedge fund Equity Growth fund for long term prospective.
Rahul Goel answers, hiten, hi. at personalfn we are not in favour of these contra schemes etc. we prefer the simple diversified funds, which tend to offer a better risk adjusted return over the long term.
Chandra asked, Hi rahul How do you rate the NFO Uti lifestyle fund
Rahul Goel answers, chandra, hi. i think it is best that you avoid the fund. go in for an existing well managed diversified equity fund instead.
kingshuk asked, Can you suggest a good mid cap fund?
Rahul Goel answers, two schemes we like are sundaram select mid cap and franklin india prima fund. and our view has not changed despite the fact that these schemes have not done very well in the last couple of months. we believe they will deliver over the long term.
kuldeep asked, i have found a CFP to be better than a company agent or representative. They seem to take a holistic approach. what is your comment on this. I am now suggesting my friends to hire a CFP
Rahul Goel answers, kuldeep, hi. i am not sure whether a 'degree' assures anyone of the honesty of the representative. and in our view that is most critical. no point in having a very well qualified advisor who is not being honest with you!
Rahul Goel answers, at 2007-07-19 13:01:55nk, hi. assuming that inflation is at about 6% over this period, and that you set aside about rs 1.5 lacs per annum towards medical and travel, then you will need to invest about rs 28,000 per month in a portfolio of assets which returns about 15% pa. we have a retirement planner on personalfn.com which you can use and customise it further to your needs.
Rahul Goel says, Thank you all for taking time out to participate in this discussion. See you all next week.
Chat with Rahul every week!