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Key to investing in equities

January 10, 2008 18:31 IST

Financial planning is a process of managing your finances to help you make the most of your money to achieve your goals. You may be preparing for retirement or want to make sure you can cover the cost of educating your children.

How best to manage your money? What strategy to plan? Financial Planning expert Rahul Goel answers some of your queries.


Rahul Goel says, Good afternoon! Welcome to the financial planning discussion! Lets start!

niraj asked, I am married, no kid and 30 years old living in rented house 9K rent in bangalore. I am earning 45000 PM. please let me know how much I should invest in stock, MF and LIC.
Rahul Goel answers,  at 2008-01-10 13:05:04niraj, hi. well, for starters you should save as much as you can. the next thing is the allocation. given that you are young and probably have a high risk appetite, you should have a large chunk of your money in stocks/equity funds. a small portion of your monies can go into the small savings schemes. insurance is not an investment and therefore it is outside the ambit of asset allocation. but then insurance is necessary - take a pure term policy which will cover you for the next 30 years.
RakeshInv asked, Hello Mr. Rahul, Please advice whether i should invest in Reliance diversified Power sector fund now ?? when the market is at its all time high !! awaiting reply..... regards, Rakesh
Rahul Goel answers, rakesh, hi. our view on thematic and sector funds is that they are best avoided. however, if one is very keen to have exposure to such funds, and understands the risks well, then maybe 10% of the overall monies to be allocated to mutual funds can go into such funds. with regards to the markets being at an all time high, well, our view is that do not pay much heed to the sensex. it is skewed by a handful of stocks.
tanu asked, mf or ulip's(profit plud)?
Rahul Goel answers, tanu, hi. i would go with mutual funds and a term insurance combination.
seema asked, hi do u think investing in real estate is more beneficial than in MF
Rahul Goel answers, seema, hi. there is no doubt that one should have real estate in the portfolio. however, given the present circumstances, one cannot diversify one's real estate holdings. so you own a property in mumbai and that's it. the best would be if yuou could own property across india... this could be possible via real estate mutual funds, which are yet to be launched. equity funds invest in a different asset class - equity. as such property and equity are not comparable. both should find a place in your portfolio, in an allocation which suits you best. the allocation will need to be arrived at in discussion with your financial planner.
ganeshv asked, Hello Sir, I'm Ganesh How to split 1 lac investment for tax benefits in effecient way, i like to invest in MF, PPF, LIC, Bank FD. My plan is MF - 25 K LIC - 10 K PPF - 10 K Bank FD - 25 K PF - 20 K CHarity - 10 K Can you suggest me some thing better than this or is this OK? Thank You, Ganesh
Rahul Goel answers, ganesh, hi. all seems ok, but why invest 25% of the monies in a bank fd? you would be better off clubbing this monies either into mutual fund or PPF... but depending on your risk appetite and tenure of investment.
mm asked, Hi, I am 30 Years Old. I want to have MONTHLY PENSION of Rs 1 Lakh after age of 58 Years. Pls suggest Steps to acheive it.
Rahul Goel answers, hi. to be able to achieve this objective, you will need to accumulate a corpus of rs 10 cr by the time you retire. this will earn you rs 500,000 pm (rs 100,000 adjusted for inflation of 6% pa) 28 yrs from now. and to accumulate this money, you need to start saving about rs 50,000 pm in instruments that will yield about 15% pa.
ravimittal asked, Hi, WHat is the benefit of ULIPs? I feel MF + term isurance will solve the purpose. Please reply for this comparision.
Rahul Goel answers, ravi, hi. mutual fund plus term insurance is a better option. ulips can be beneficial, but you need to select carefully... also they are unlikely to form the core of your investment portfolio.
deep asked, please reviwe my portfolio i am 30 maried and investing fow 10 years hdfc tax saver,magnum taxgain,fedility tax adv,kotak tax adv, sbi magnum contra,sbi mag balanced,kotak 30, kotak opportunity,sundaram select mid cap. Should i add more funds?
Rahul Goel answers, deep, hi. you already have a lot of funds! and notice that you do not have any fund from templeton, which in our view is amongst the top three amcs in the country. you have a lot of contra, opportunity, mid cap etc... but you do not have a single diversified equity fund like hdfc equity or franklin flexicap. so rather than add, its time to restructure your portfolio.
chakri asked, Hi Rahul good afternoon I would like to invest 10000 per month for 3 years can you suggest me good funds where I can invest
Rahul Goel answers, hi. well, assuming you can take on risk, invest in a basket of funds like hdfc equity and fr india flexicap. also, i think if you can stretch your tenure to 5-yrs, then an all equity portfolio could work very well for you.
cheru asked, Hi Rahul good afternoon, Please advice me about RNatural Resources MF. I am planning to invest in it. What will be future of this fund? in your view.
Rahul Goel answers, kartik, hi. we do not have any view on this fund. our view on sector/thematic funds has been discussed earlier in the chat today.
ashish asked, hi rahul, my current portfolio is , MFs 10k each jm basic growth, dbs chola small cap, birla sunlife special situations and kotal info fund. 2 SIPs , 1500 each in icici pru income multiplier and reliance power diversified. I have shares in GTL infra, apollo tyres, centurion bank, vijaya bank, ispat and RPL. please advise how can i increase further?
Rahul Goel answers, ashish, hi. with regards to your mutual funds, i think you have a problem there. you seem to have only sectoral or thematic schemes. ideally these should constitute no more than 10% of your portfolio, if at all. time to have a serious chat with your mutual fund agent...
Sanjay asked, Good Afternoon Rahul, I am an NRI and my present savings is Rs 1800000 per year. I have not invested in Insurance as my company takes care of my worldwide life insurance and medical insurance. I would like to invest in life insurance and would like to invest my money in some profitable ventures apart from the regualr NRE fixed deposits. Please tell me some good options and the liabilities of tax payments. Till now I don't need to pay taxes on the returns of fixed deposits as they are NRI fixed deposits. I own a house in India for which I pay the loan amount from my NRI savings account.
Rahul Goel answers, sanjay, hi. well, there are definitely avenues which are a lot more profitable than nre deposits and also do not entail taking on much risk. the tax implications too in such instruments are fairly simple. these instruments are called Fixed Maturity Plans - FMPs. even on a post tax basis, these should be more profitable as compared to nre deposits.
meyyappan asked, Hi Good afternoon rahul, what r all the things do we need to consider while selecting the MF.
Rahul Goel answers, hi, there are a lot of things one needs to look out for... among them the track record of the fund house, the fund management team and the scheme. then ofcourse, you need to see the portfolio construction of the scheme and whether they have consistently been sticking to their mandate. if you wish to read more about selecting mutual funds, you may want to download the free mutual fund guide from www.personalfn.com
prasad asked, Hi,is Franklin Flexi cap good to keep?
Rahul Goel answers, prasad, hi. in our view, yes!
k asked, I have invested in SIP on DSPML Equity, Reliance Vision, MAgnum Contra and Birla Micap each rs.4000 per month. Let me know if this is a good portfolio
Rahul Goel answers, hi, you can definitely do a lot better than this. the only diversified fund you own is dsp ml equity... the others are sectoral or thematic. consider adding diversified funds like hdfc equity and franklin flex. also, pl note that you need to get the allocation for each scheme right as well.
Diwakar asked, hi..i have invested in ICICI Pru Infra fund and for the past 1 week its declining ....should i hold it??
Rahul Goel answers, diwakar, hi. the nature of euqities is such that it tends to be volatile. at personalfn we tell our clients that a 20% swing is not uncommon. and the most important point - if you are investing in equities, you should have a minimium investment tenure of three years. so if you have invested for a shorter tenure or do not have the appetite for volatility, then you must question the person who 'sold' you this fund.
dip asked, hi rahul, could you please suggest what's the best investment strategy for nri's?
Rahul Goel answers, hi. frankly, the best strategy will be to identify an honest financial planner who will guide you on where to invest your monies in india.
amns asked, Rahul i am 40 and i want to retire at 55 with a monthly pension of 75K please guide me steps.
Rahul Goel answers, hi. if you wish to earn an inflation adjusted rs 75,000 pm, 15 yrs from now, you will need to have a corpus of rs 3.5 cr. and to accumulate this you should set aside about rs 100,000 pm, in assets yielding 15% pa returns.
abc asked, is it better to invest in N.F.O OR the funds having track funds.pl suggest me some good ELSS fund &also good equity diversified fund
Rahul Goel answers, hi. almost always it is better to invest in mutual funds with a track record. nfos are mostly marketing initatives aimed at gathering money.
uday asked, I am holding a well diversified MF portfolio for last six months.One of my diversified power sector fund has gained 95 pct till date.Most of the market experts feel that power sector is overheated.I am thinking of redeeming only the gain from the said fund and looking at investing this gain in another sector fund.Which sector you feel will outperform in 2008 ??
Rahul Goel answers, uday, hi. the performance of the power sector funds has surprised everyone. but the fact that you are considering booking profits is admirable given that almost everyone else wants to invests in such funds at current levels! but then you wish to inevst the money in another sector fund?! why do you want to do that?! if this is your 'play money' then go ahead... but if this is serious long term money, then maybe its time you settled for the well managed diversified equity funds.
eshwar asked, What do you think is a practical returns one can expect from MF's going fwd say per annum?
Rahul Goel answers, eshwar, hi. a well managed equity fund should return about 15% pa over a 5-yr investment period. there will be years when the returns will be higher and lower. but the average should turn out to be about 15% pa.
amardeep asked, hi...i am 27.single(planning to marry this year).wokring in bangalore..earning 30k..kindly suggest a gud portfolio..
Rahul Goel answers, amar, hi. great that you are starting to save early! like i said earlier, save as much as you can. and since you probably have a high risk appetite, have a predominatly equity portfolio. when i say equity, i suggest equity mutual funds. and funds like franklin flexicap and hdfc equity should form a part of the portfolio you design for yourself. if you need help, you can always touch base with a Personalfn Consultant (we have an office in bangalore).
Ganesh asked, hi iam 23 years old, i have jus started earning..my income is 20k per month..how much and how should i save?
Rahul Goel answers, today's discussion has a lot of very young participants! ganesh, hi. well, save as much as you can. and opt for a predominantly equity fund portfolio.
anandarao asked, Hi Rahul, How does a ULIP help us in savings for the future? I have a child studying in 4th std and like to have funds in next three years as I have admit her to high school. Is mutual fund ok or ULIP. Regards, A. Ananda Rao
Rahul Goel answers, hi. ulips will not suit you as in our view the min investment period for a ulip should be 10 yrs. anything less than that and the cost factor will impact returns significantly. and since three years tenure is sacred, maybe you need to have not so aggressive portfolio. do not put all money in equity for sure.
nishant asked, Hi Rahul, If I have 100K to invest today, wud you advsie to invest 50K in Relience Natural resources fund-NFO at this juncture???
Rahul Goel answers, nishant, hi. i would not advise you to invest 50% of your monies in a sector/thematic fund.
Srins asked, Dear MR Goel Iam 28 yrs of age with good risk appetite and also willing to stay invested for long tenure. Here is the breakup iam planning Equity Div (My core MFs) HDFC Growth - 25% Reliance Vision - 25% Midcap Birlamidcap - 5% Reliance growth - 15 % Sundaram select - 5% Thematic/Others Rel div power sector - 5% ICICI Infra - 5% DSP TIGER - 15% Please give me your views on my allocation. Do suggest me any corrections u feel i shld do. Thanks
Rahul Goel answers, hi. while its good that you are already saving money, but you need to be careful where the same is invested. while hdfc growth has done well off late, we believe hdfc equity is a far better fund to own. then a
Srins asked, Dear MR Goel Iam 28 yrs of age with good risk appetite and also willing to stay invested for long tenure. Here is the breakup iam planning Equity Div (My core MFs) HDFC Growth - 25% Reliance Vision - 25% Midcap Birlamidcap - 5% Reliance growth - 15 % Sundaram select - 5% Thematic/Others Rel div power sector - 5% ICICI Infra - 5% DSP TIGER - 15% Please give me your views on my allocation. Do suggest me any corrections u feel i shld do. Thanks
Rahul Goel answers, contd.. then about 60% of your monies is in sectoral/thematic funds... this again is too high. we would have preferred to have no more than 10% of your monies in such funds. the core of your portfolio should be schemes like hdfc equity and franklin flexicap.
dj asked, Hi Rahul, good afternoon, I Want to invest in MFs for my Tax saving. right now i am in abroad getting salary in India , how can I buy MFs, and which one ? please suggest me.
Rahul Goel answers, hi. consider funds like franklin india taxshield. i guess, best way to invest would be to get in touch with your bank...
gaj asked, Shall i invest in mutual fund or ppf??
Rahul Goel answers, gaj, hi. the answer to that would depend on yoru risk appetite. ppf is a very safe instrumment with an assured return. in case of mutual fund, there is no such assurance or safety. but there is a chance you may earn a higher return.
raminder asked, Hi Rahul, I'm 31 years IT guy. Please review my investments. 20K annually in ICICI Pru - LifeTime (in 3rd years), 20K in Tata-AIG's Pension plan, 3K SIP in Kotak Flexi Plan II - Regular and 3K SIP in Children Dream Plan Life Coverage Opt 300%-Term 18 for my daughter Any changes or any new fund to look for?
Rahul Goel answers, raminder, hi. well, all you have are ulips in your portfolio. its time you stopped looking at more policies and started adding mutual funds to the same. be careful you advises you on funds. seems like the person who has advised you on ulips has not been honest in his views to you.
raminder asked, Hi Rahul, I'm 31 years IT guy. Please review my investments. 20K annually in ICICI Pru - LifeTime (in 3rd years), 20K in Tata-AIG's Pension plan, 3K SIP in Kotak Flexi Plan II - Regular and 3K SIP in Children Dream Plan Life Coverage Opt 300%-Term 18 for my daughter Any changes or any new fund to look for?
Rahul Goel answers, raminder, hi. well, all you have are ulips in your portfolio. its time you stopped looking at more policies and started adding mutual funds to the same. be careful you advises you on funds. seems like the person who has advised you on ulips has not been honest in his views to you.
monty asked, hi sir, ur comments on birla special specified fund.....
Rahul Goel answers, monty, hi. we have recommended to our clients that they avoid investing in the funds. fyi, over 95% of new fund offers that are launched are not recommended by us to our clients....
svj asked, I am looking for balanced portfolio. Recently I made SIP of 1000 each in SBI mag bal (g),HDFC Tax saver,sundaram bnp paribas tax saver, Relience diversified power(g), ICICI infrastructure (g).I had to increase MF exposure by Rs 5000 per month. Pl suggest to increase SIP of any of above funds or invest in other mutual fund.
Rahul Goel answers, hi, how can this be a balanced portfolio?!! you own very high risk sector funds. if you are looking for 'balanced' funds then the best by far is hdfc prudence.
Rahul Goel says, Thank you all for participating in the discussion. If you want Personalfn to guide you with your queries, please do write in with your complete contact details to info@personalfn.com.