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Rediff.com  » Business » Mutual funds: What to buy, what to avoid

Mutual funds: What to buy, what to avoid

Last updated on: July 26, 2007 15:26 IST

Are you bad with finances? Do numerous investment options baffle you? What are the best mutual funds available? Which funds accrue maximum profits? In an hour-long chat on rediff.com on Thursday, Rahul Goel, CEO, Personalfn.com, and financial planning expert, answered many such queries. Here is the transcript:

Rahul Goel says, 
Good aftertoon! let's get started!


Praveen asked, Hello Mr Goel. I have invested in a 5 year SIP for Rs 2000/month in Franklin Templeton Prima Plus and DSP ML Opportunities, both being Growth options. I would like to know your opinion on these. I would like to stay invested in them for the whole 4-5 years.
Rahul Goel answers,  at 2007-07-26 13:01:31praveen, hi. both the schemes you have invested are very good. over time i suggest that you have about 5/6 schemes in your portfolio. also, i hope you are investing for a purpose in the first place. that is critical.


RKC asked, RKC says, for an active mutual fund & direct equity investor like me, would you suggest I go for ETF/Index funds?
Rahul Goel answers, At Personalfn, the financial planning initiative i represent, we are not big supporters of either ETFs or index funds. we think that a smart investor should go in for actively managed funds. etfs/index funds can be added later on... but in either case should not form the core of your portfolio.


krs12@rediffmail.com asked, I have salaried income only, banks have incresed their floating home loan interest from 7% to 12.5% how to setoff this ,my salary is not incresing in this proportion, hoe to meet their increse other than incresing tenure from 15 years to 25 years.
Rahul Goel answers, well, there is little that you can do in such instances. one thing that you should not do is take a personal loan to meet this obligations. cut your expenditures instead. also try and negotiate the rate of interest with the bank. the final option could be to move to a smaller house; i am assuming that this is the property you live in.


Anshuman asked, Hi Rahul, I would like to invest 10,000 per month thru SIP in 5 different MF for next 1 yr. Please suggest 5 good mutual funds which would yield good return at the end of the tenure.
Rahul Goel answers, anshuman, hi. i think you should go about building a portfolio of well managed diversified equity funds from amcs like templeton, hdfc and sundaram. ensure that you have a good mix of style of money management. avoid sector funds. some funds we like are franklin flexi cap and hdfc equity. i recommend that you discuss this in detail with your financial planner... he will help you allocate the money across various schemes.


rinkujitu asked, Hi, my salary is 50K and I have just started investing. Please suggest weather I should go for MF or stocks ( trading or IPO) and I want quicker returns with bit of risk. My expenses are 30K and I can invest rest amount for 5 years or so.
Rahul Goel answers, well, whether you should inevst in stocks or funds will depend on how much free time do you have every day. if you do not, then opt for mutual funds. then again, if you are lookging at equity funds, you will have to dilute your expectations of quick returns... look out 3 years atleast to make an attractive return. since you are starting off, be very careful when selecting a financial planner. the right choice will make investing very profitable for you.


RKC asked, RKC says I have invested in Templeton Blue Chip, Prima, SBI-Contra, Sundaram Select Midcap, Reliance vision & Growth, Pru ICICI Dynamic Plan, HDFC Equity & Prudence. How would you rate these funds.
Rahul Goel answers, At Personalfn we tend not to recommend funds like 'contra' to our clients. we prefer the simple plain vanilla diversified equity funds.


BABU asked, Sir, what's the best mutual fund in the industry presently which would be safe to invest regularly
Rahul Goel answers, babu, hi. if you mean the mutual fund house, then the answer is not very difficult. incidentally Personalfn, in association with Business India, has a fund house of the year award. so far templeton and hdfc have won it. so, these two amcs for sure should find a place in your portfolio. however, you need to select the scheme that suits you best.


mayur_bhate asked, Hi, is it feasible to go for ULIP if its for a time span of around 10 years?
Rahul Goel answers, mayur, hi. i would recommend that you have a 12 - 15 yr time frame before committing monies in a ULIP.


Bijay asked, I have invested in the following funds through SIP,Fidelity International Opportunities Fund - Growth ,ICICI Prudential Service Industries Fund - Growth,SBI Magnum Balanced Fund - Growth,SBI Magnum Global Fund 94 - Growth,Franklin India Opportunities Fund-Growth.What are the prospects of these funds in next 3 years?Should i add some other funds?
Rahul Goel answers, bijay, hi. the prospect of the fund is very simply put linked to two factors - one, the performace of the asset class it is invested in (in this case the stock markets) and two, the ability of the fund manager to outperform the broader market. so while the performance of these funds will possibly be in the direction the broader market moves in, some funds will do better as they have smarter fund management teams. we recommend you avoid sector funds and inevst in diversified equity funds from amcs like hdfc, templeton, dsp, fidelity among others.


Saurabh asked, Hi I have 4 lacs cash i would like to know how to invest this money to get the best returns in long medium and short term, I would like to invest 50% long 30 % medium and 20 % in short term
Rahul Goel answers, saurabh, hi. its good that you are clear in terms of the tenure for which you wish to invest your money. as far as the short term is concerned (less than 1 yr), it is best that you put the money in an 1-year FMP (a close ended debt fund).. you may want to act fast as returns on these intruments have been falling of late. with respect to medium term, put monies in a mix of debt and equity (or simply balanced funds); the long term portfolio can be of equity funds. select funds that suit your risk profile and invest with the aim of holding till the time you need money. every time you churn you will lose money and this will depress your returns.


krs12@rediffmail.com asked, Some mutual fund gives 99.2 % annual return some 12% where a person should invest in mutual fund
Rahul Goel answers, a person should invest in well managed funds that suit his/her risk profile and return expectations. do not go by returns alone.


RKC asked, RKC says, Can I get a montly return of Rs:15000 by investing 10-15 Lakhs in a portfolio of equity and debt funds.
Rahul Goel answers, seems difficult. however, if you were to invest this money for several years and then try and generate the monthly income, it will be a lot more feasible. in current times, the monthly income this corpus will generate will be about rs 8,000 to rs 10,000 post tax.


RKC asked, RKC whats your take on Sundaram Paribas Global Advantage fund?
Rahul Goel answers, hi, these are sophisticated funds that need to be understood very well before money is committed to them. these funds will appeal to a very select class of inevstors in our view. and in any case, these are just the initial launches in this category.. it may help to wait a while to see what else is launched in coming months.


Arshad asked, Hi Rahul, I am investing 11,000 Rs/month in Pru ICICI Life Time MF schedme. Am I investing too much in one MF, shall I have to increase the money and increase the no. of MFs to get better results?
Rahul Goel answers, i think you are investing money in a ULIP as against a Mutual fund. pl call you financial planner and ask for a clarification!


mukesh asked, hi, i want to invest in SIP and MF. I also want to take LIC policy rather than ULIP. please suggest me best. Also best SIP & MF. my salary is 15 K per month
Rahul Goel answers, mukesh, hi. regarding insurance, i think rather than "LIC" you should take a pure "term" policy.. this from whichever insurer is giving you the best rate. now regarding sips, maybe you can start with funds like franklin flexicap, hdfc top 200 etc.. i am assuming you have a long term investment horizon in mind.


raj asked, what are the best possible options for investing our money?
Rahul Goel answers, raj, hi. the answer to your query would vary person to person depending on the need, objective and nature of the person.


rakesh asked, well i have some money in my saving account and i am not sure if i should go for some properity or MF. I have so far been investing only in LIC equity based policies which are non taxable can you suggest wheter i go for property or MF
Rahul Goel answers, rakesh, hi. if you do not own the property you live in, then maybe you should plan to buy one. however, if you are looking at buying a property as an inevstment, then we would recommend you avoid. the costs associated with owning a property usually make the investment proposition unattractive.


manish_ujjain asked, What is the best way to find correct MF for long term investment
Rahul Goel answers, manish, hi. well there are two ways. one, you become an expert yourself. the other, you find yourself an honest financial planner.


Ashish asked, Which one is good for investment for Small investors NFOs or existing MFs??
Rahul Goel answers, ashish, hi. in most instances it is better to inevst in existing funds. nfos are usually marketing gimmicks to mobilise more money.


SHREYA asked, i want to know how to manage my monthly income so that i can get a secured future
Rahul Goel answers, shreya, hi. such advice can be given to you only after i have more detailed information about your finances.


govind asked, Govind asked, which mutual funds in these days are good for investment. which option is best--Monthly or one time.
Rahul Goel answers, govind, hi. i have already discussed some schemes earlier. regarding mode of option, it has been our experience that investing via SIPs suits most people. however, if you have surplus then a one time investment may be necessary.


govind asked, Govind asked, which mutual funds in these days are good for investment. which option is best--Monthly or one time.
Rahul Goel answers, govind, hi. i have already discussed some schemes earlier. regarding mode of option, it has been our experience that investing via SIPs suits most people. however, if you have surplus then a one time investment may be necessary.


jbsainani asked, Which are the best infrastructure MF
Rahul Goel answers, well, there are many out there... and one can expect more to be launched! are you sure you wish to invest in a sector fund? do understand the risk return trade off before committing monies to these fund.


Ravi1970 asked, While doing SIP in Equity Funds, which option is better Growth or Dividend Reinvestment?
Rahul Goel answers, ravi, hi. to keep it simple, it may be best to go in for the growth option. sometimes the dividend reinvestment option may have a tax implication (as in the past).


Ananth asked, Could you please comment on UTI India Lifestyle fund ?
Rahul Goel answers, ananth, hi. our view to our clients at personalfn has been to avoid investing in this scheme.


Alex asked, Hi, The markets/sensex is at its peak, is it advisable to redeem the MF investment and enter at a later date when sensex is down ?
Rahul Goel answers, alex, hi. it is very difficult to time entry and exit. also, only in hindsight will you know whether this was the right time to redeem. we usually recommend to our clients to remain invested for the tenure they had planned to.


naz asked, for a good return after 3 yrs which is the best scheme in mid cap category..
Rahul Goel answers, we like schemes like franklin prima and sundaram select midcap. however, a 5-yr investment tenure may be preferable here.


subha asked, I would like to invest 40k in ELSS in 4 phases (10k each) this year for tax saving as well as good return. When should I invest and which are the good funds for ELSS. Is it good plan or should I go for SIPs?
Rahul Goel answers, subha, hi. it may be wise to select schemes like hdfc long term advantage and franklin tax shield and do a six month SIP.


akm asked, I would like to suggest some MFs to my father who got retired recently, to invest his retirement benifits. He dont mind taking moderate risk for some 3 -4 years. What would you suggest? Is investing in MF as lumpsum risky now on a invest timeframe of 2 to 3 years. Please advice.
Rahul Goel answers, will your father be dependent on the income from these investments? if yes, then avoid equity funds. go in for a mix of post office schemes and MIPs. if not then you can opt for balanced funds. as long as you are investing in equities, you need to aware that there is always a near term risk.


kemman13kes@rediffmail.com asked, Could you suggest some good NFOs to invest about 2L for a period of 5 years? What is your opinion on DSP Merill Lynch Gold Fund?
Rahul Goel answers, why nfos? why not existing funds? i recommend you reconsider this investment strategy.


husainy asked, i would like to know whether i can withdraw mutual funds in 2 to 3 months after investing when their NAV shows good returns. how much time it takes to get reedemed amount.
Rahul Goel answers, open ended equity funds allow exit, but there may be an exit load that you will need to pay.


mojowrites asked, I invested in SBI Magnum Contra Tax Saver fund using the SIP route @2500p.m.. I consulted the MF ranking /recos before doing so. Yet, after 7 SIPs my investmt shows almost nil profit, which is bad espcially now that Sensex is @around 15,700. My past experience with other SBI funds has also been bad. Your comment, plz.
Rahul Goel answers, leaving aside the fact whether the scheme is good or not, when doing an SIP, you should not expect to earn a return in seven months! have a three year outlook atleast.


Neeraj asked, Hello, How you would suggest about JP Morgan India Equity fund?
Rahul Goel answers, neeraj, hi. j p morgan is a new amc. we would prefer to wait and watch before recommending it to our clients.


annamaneni_r asked, Mr. Rahul, Can you please give me two MFs for SIPs. I am really dumb in MFs. But i want to invest 20000INR per month. Thanks.
Rahul Goel answers, i have discussed several schemes earlier. what i recommend to you is that since you are a beginner, invest some time and identify for yourself an honest financial planner.


anil asked, As a beginner in mutual funds is it wise to invest only IT Funds, Banking Funds & Infrastructure Funds?
Rahul Goel answers, anil, hi. on the contrary, we do not think you should invest in such funds at all!! go in for the diversfied equity funds only.


Amitabh asked, Hi Rahul. I have invested around 5 lakhs in various mutual funds. around 6 months back when market was not at the peak. Currently it seems that we are touching new heights. I want to invest a 5 more lakhs in mutual fund. So do you think I should invest it right away or shall I wait till nov-dec Or Shall I invest through AIP.
Rahul Goel answers, amitabh, hi. i think the STP option would be best. Do not try to time the market. in the long run, its a futile exercise.


max asked, Dear Rahul is there any scheme currently available for residents indians to buy into Euro or foreign currency based Debt funds? You asked, Dear Rahul how can I protect my investment in India from Ruppee related fluctuations? You asked, Why is ICICI pru dunamic plan doing so poorly? You asked, Dear Rahul is there any scheme currently available for residents indians to buy into Euro or foreign currency based Debt funds? You asked, Dear Rahul how can I protect my investment in India from Ruppee related fluctuations? You asked, Dear Rahul is there any scheme currently available for residents indians to buy into Euro or foreign currency based Debt funds? You asked, Dear Rahul how can I protect my investment in India from Ruppee related fluct
Rahul Goel answers, max, hi. i think you can invest in foreign currency denominated debt funds... templeton had one scheme. going forward you will have many more options. If you are in India, then you do not feel the impact of Rupee fluctuations unless you consume imported goods; if you wish to protect your wealth then you can take foreign currency exposure.


anuj asked, Sir, my objective is to have 50 lac in 10 years and i want to invest 20 k in month for 10 years in MF (Equity Growth)SIP ,tell which funds to invest
Rahul Goel answers, anuj, hi. good that you are clear on your objective. i have discussed several schemes earlier which could find a place in your portfolio. HOwever, you will need to find yourself an honest financial planner who will help you in reviewing those schemes and also ensuring that you achieve your goal!


Rajesh asked, Hi Rahul, What is a difference between SIP and MF? And which is the best SIP for invest.
Rahul Goel answers, rajesh, an SIP is only a mode of investing... it is not a scheme. so when you do an sip, you are putting money into a mutual fund scheme. these days we find people "do SIPs" but in the wrong schemes. so it is important that you get both the mode of investing as well as the scheme right.


Anwar asked, Hi,I'm an NRI, have no much knowledge about MF industry, now planning to invest in MF. So What is my comfortable range of cash to start? What r the things i want to do? I can invest Rs.20000.00 every month. give me advice.
Rahul Goel answers, anwar, hi. the biggest challenge you will probably face is to get the right advice. irrespective of the amount of money you are willing to commit, if you do not get the right advice, you will not be able to make the return that you plan for. the suggestion, at the risk of sounding repetitive, get yourself an honest financial planner.


dipak asked, hi, what do u think abt the mutual fund having international exposure, like one fidelity int.fund?
Rahul Goel answers, dipak, hi. so far we have not recommended any such scheme to our clients at personalfn. however, we are keenly awaiting the launch of the global funds. some of these new launches may appeal to select inevstors.


kriplani asked, hi Rahul: i hv recently invested 4 lakhs in Relicance Diversified Power sector fund, for longer term say 3 years..is it worth investing?
Rahul Goel answers, have you put all your money in a power sector fund? apart from the fact that you should avoid sector funds, you should also diversify your money over 5/6 schemes. who advised you to make this investment?!


shyamvallabh asked, Hi Rahul, I want to invest around 5k per month towards long term fund, that will give me good returns, i intent this for my kid who is 8 years, your suggestion pl
Rahul Goel answers, select 5/6 well managed diversified equity schemes and divide the money in the ratio suggested by your financial planner. you will also need to review the portfolio atleast twice a year. most importantly, avoid churning the portfolio. churning will have a significant long term adverse impact on your returns.


anwar_qs asked, As per latest trend of Sensex, What will be the tenure to invest in MF to get 100% returns?
Rahul Goel answers, anwar, hi. i think if you have selected your equity schemes well, it should take about 5/6 years to double your money. this is based on our estimate of a 15% pa return from the stock market.


Rahul Goel says, Thank you all for participating in the financial planning chat. See you all next week!

Chat with Rahul every week!

To read more transcripts, click here!