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MFs for your child? Wise investment

February 12, 2008 11:50 IST
Do things like mutual funds baffle you? Are you aware of the investment options they provide? What are the best mutual funds available in the market? Which funds accrue maximum profits?

What are the crieria for evaluating a fund? Which funds provide the best SIP options? Are SIPs the easy way of making quick bucks? When and how should one buy mutual funds?

In an hour-long chat on on Friday, mutual fund expert Rahul Goel replied to many such readers' queries. Here is the transcript:

Rahul Goel says, Good evening! Welcome to the discussion on financial planning! Let's start!

Fageria asked, Which MF is better for long term (15 years)
Rahul Goel answers,  at 2008-02-08 15:57:34hi. if you are investing for a 15-yr tenure to begin with then its very important that you invest with the right asset manager i.e. the AMC and the fund management team. The other thing to keep in mind is that over such a long tenure diversified equity funds will perform better, from a risk adjusted perspective, as compared to sector/thematic funds. 15-yrs is a great time horizon for investing in equities. select your funds smartly, or get professional help, and start investing!
Kishore asked, As i beleave in safe and one time investemny i have invested in LIC market plus,is this better option or u suggest some else for long term growth?
Rahul Goel answers, kishore, hi. at Personalfn we believe that investors should not confuse insurance with inevstments. they should take term insurance and complement that with mutual funds. pl note that if your LIC ulip is invested in equity then you are taking some risk! your money may not be as safe as you think it is!
Rohan asked, Hi... I'm Rohan, 23 yrs old. I've started investing in shares. What should I do to build a sound portfolio...
Rahul Goel answers, rohan, hi. its great that you have started saving so early. since you are investing in stocks let me ask you this one question - do you have the necessary skills and resources to pick the best stocks out there? in the last few years, most stocks have done well... this has probably made many investors feel that investing in stocks is an easy thing to do. i recommend you tread carefully.
Santosh asked, Wht u say abt the market, few days back when sensex down till 17000 mark i have purchased nearly 5lacs MF
Rahul Goel answers, santosh, hi. at personalfn we have no view on the near term movements in the stock market. we do not spend time thinking about this. what we do focus on is whether valuations are expensive or cheap. and when they are cheap, re recommend to our clients to invest in recommended funds, but in line with the planned allocation. by the way, our clients were investing money the day the markets started to fall late last month.
Rahul Goel answers, ananda, hi. in growth option no dividends are declared i.e. your money compounds. in case of a dividend option, the fund pays out a portion of the capital as a divided. pl note that a dividend received from a mutual fund tantamounts to the same things as you redeeming some mutual fund units in many senses (the tax implications are different). its your own money, not additional profit as some investors seem to think so.
vikas_poonia asked, Hi Rahul Gud Evening.. I want to invest 10k rupees in a mutual fund for 3 years [not for tax saving].Can u please let me know where shuld i invest?Please let me know the name...
Rahul Goel answers, vikas, hi. before you invest money, ask yourself a few questions. why are you investing? do you have appetite for risk? what is your expectation of return? once you have clarity on these three, then it will be relatively easier to decide where to invest money. if you have appeite for risk, and are looking for about 15% returns pa, then equity funds would qualify as an investment. in this category we like funds like hdfc top 200 and franklin india flexicap.
SD asked, hi I'm 25 yr single. I want to build my MF portfolio. I started with HDFC n SBI ELSS(2k each per month). Now i wish to add a few more MF's. I have decided to add Reliance Vision(3K/month), JM Emerging Leader's(2k/month) and SBI MidCap(1k/month). Is my selection Right? Kindly Guide. If there are any other MF u can suggest. I'm able to invest for 80c
Rahul Goel answers, hi. i suggest that before investing any more money, you understand clearly what kind of a portfolio you wish to build. if you have a lot of sectotr/thematic funds in your portfolio, you are taking on a lot more risk, with the hope of earning higher returns. since you seem to be a relatively new investor, its best you start by investing in the well managed diversified equity funds which have good track records. in short, your selection does not appear to be best suited to you.
Prashanth asked, Hi, I'm Prashanth. I'm 27 yrs old. I am executive. I would know about the good investment opportunities which are risk free & which can fetch me good returns going forward. Pls advise.
Rahul Goel answers, hi. if you are looking for risk free investment opportunities then the return you should expect should be about 8%. if you want to earn more, then you need to take on risk. any reason you do not wish to take some risk atleast?!
kiran asked, Hi rahul, i am planning to invest 50,000/- in ELSS. Kindly suggest me which are the better option? I am thinking the DSP-ML tax saver and Deutsche Tax saver, is these funds are better? Please suggest me which are the better?
Rahul Goel answers, kiran, hi. in the tax planning fund category we prefer funds like franklin india taxshield. even dsp ml tax is on our recommended list, but with a lower priority if you will.
Sagar asked, Hi Rahul, Can you tell me how I need to plan my investments (in terms of percentages... like MF - 15%, Equities - 50%, Cash balance - 25% etc.), so that I can lead a decent life after my retirement at 50? Please take an example with an income of Rs.6 lakhs per year as net take home pay and Growth rate in the salary will be 15% per year. Consider the scenario of taking a home loan of Rs.25 lakhs too...?
Rahul Goel answers, sagar, hi. for me to be able to guide you, i need to know your present expenditure levels among various other things. also, i do not know what your present age is?! i recommend you download our retirement planning guide from its free of any charge.
KK asked, What would you recommend for a young investor building up his portfolio. I mean in terms of ELSS, Diversified, MID cap, contra, balanced, debt funds. how many or of how much percentage. if you could provide some examples it would be helpful
Rahul Goel answers, hi. all you need to do is invest in well managed diversified equity funds like hdfc equity and franklin india flexicap. if you need to invest in tax funds then opt for schemes like franklin india tax shield.
Sriram asked, In this Global situation of recession and Meltdown, Do u advise to continue holding mutual fund and stock that I am holding ? Or, sell them and go into Bank FDs ? Also, what are you yourself doing with your finances, in view of recession ?
Rahul Goel answers, sriram, hi. this is something a lot of our clients ask us too. our view is that if you are investing for a goal which is still atleast 3-yrs away, stay invested. however if you have needs for the money in the short term, then its always best to de-risk.
Gajanand asked, I have invested in MF 4 months back, now all the MF's have the -12% return, shall hold these mutual fund's OR?
Rahul Goel answers, gajanand, hi. when you invested in the fund, what tenure did you have in mind?! if it was less than 2/3 yrs, then you made the wrong decision. but if you are going to be invested for a longer tenure, then do not worry! stay invested... the stock markets are by nature volatile. they may be more so in coming months/years. but be sure you are invested in schemes which are best suited for your profile and needs.
dfd asked, am planning to invest in the following MF ..please let me know your opinion in long term view 1) Standard Chartered Premier Equity Fund 2) DWS Investment opportunity 3) SBI commafund 4) Kotak Opportunities Fund 5) JM Emerging Leaders 6) Sundaram Select Focus 7) HDFC Growth Fund 8) Reliance Vision or regular savings all are with growth option.
Rahul Goel answers, well, if you were to come to personalfn and ask us for a portfolio which suited you best, none of these schemes would find a place in it... what more can i say?!
sen asked, Hi a very Good 24 yrs old.. 20k is my take home.. My dad is working in public sector.. Am planning for a term insurance of 50 lakhs for me.. Is it a wise idea with my take home..
Rahul Goel answers, hi. even though it may seem more than you need in a couple of years, this will be apt for you. so lock in your premiums now... if you try and top up your term insurance later, the premiums will be a lot higher.
Rahul Goel answers, rahul, hi. a volatile market tends to throw up investment opportunties for the long term investor. whether you should invest in stocks or deposits, is a function of your needs, profile, risk appetite, return expectation etc. but if you have appetite for risk, and are looking at a 3/5 yr horizon, the well managed diversified equity funds continue present an attractive investment opportunity. best would be to invest via SIPs and STPs.
raviparamasivam asked, Hi,I applied HDFC Infrastructue Fund(Close-Ended) Fund for Rs 10,000.How much return i will get after 3yrs.Is it a good investment compare to ICICI Fusion and Standard Charted Midcap NFO's?
Rahul Goel answers, hi. we are not recommending this scheme to our clients. as a matter of fact we do not recommend any sectoral/thematic scheme to our clients.
zahid asked, Hi, I am earning 45k/month, I am currently investing 1.5k in ICICI ULIP plan, 2k in gold and 15k in flat EMI per month. PLease guide to have suitable saving for getting marriage?
Rahul Goel answers, zahid, hi. well, you need to start saving! ULIP is insurance, and saving for the very long term; gold is more a tool for financial security; and EMI is a liability!!
Roy asked, I am 25 years old and I have invested about 4 lacs in equity based MFs almost equally divided between Reliance diversified power sector,ICICI Pru Infra,sbi contra,sundaram capex opp,dspml opportunities and also in NFO horizon is 5 years min.wud u suggest a change in the MF portfolio?
Rahul Goel answers, roy, hi. we would not have the sectoral/thematic funds that you currently own. your portfolio should predominantly consist of well managed diversified equity funds with great track records.
Subrat asked, Would like to get advise from you on some reliable agencies which can help plan my finances for a reasonable chanrge
Rahul Goel answers, subrat, hi. if you want personalfn to guide you, please send in your details to me at
rose asked, how much term insurance one must take depending on age. Some formula for that ??
Rahul Goel answers, rose, hi. well in our view there is no thumb rule for this... what you need to do is calculate your human life value and accodingly decide. you can use our calc on personalfn for this purpose.
Shravan asked, I am looking to invest in a good Equity fund by investing 1Lakh as one-time activity. Can you please advice a good Sundaram BNP Paribas fund for the same?
Rahul Goel answers, shravan, hi. you wish to invest in equity; and that too one time; and in fund from sundaram. i assume you have planned very well already! sundaram growth fund is a fund we tend to recommend to our clients... but whether it suits you will depend on several factors.
duke42 asked, Hi Rahul, good evening.. will the NAV of a mutual fund go down to the extent of the dividend after the record date? Thanks, Ram
Rahul Goel answers, ram, hi. yes. the NAV of the mutual fund will reduce by the amount of the dividend paid. like i said earlier, its your own money that is coming back to you in the form of dividend!
sweta asked, hello this is sweta i have invested in various mutual fund like reliance power diversified (d) fidelity equity , dspml tiger , reliance natural resource , franklin templeton growth oppurtunity , pls adv whether the portfolio is good or not what , where else i can invest to get good returns in terms of mutual fund
Rahul Goel answers, sweta, hi. you need to avoid investing in sectoral/thematic funds. but if you must invest then limit overall exposure to about 10%. you do not own funds like hdfc equity and fr flexicap, which should form the core of your portfoilo.
swati asked, I want to invest long term for my child. Would it make sense to invest in Birla Dream Plan/HDFC Young Star for Children or makes sense to get a term insurance and invest in MF?
Rahul Goel answers, swati. get a term insurance for yourself, and invest in mutual funds for your child. if you have more surplus, then consider a low cost ulip.
vijay asked, Hi, I am 34 and married with 3 kids (1- 5 yr old others 1 Yr old) having net worth of 20 Mn. which has 5Mn in Realty and 3 Mn in equity based mutual fund and rest in Bank CDs. I am going to have savings of 6 Mn every year. What should be my future investment portfolio so that i can have bigger nest egg for my kids education and my retirement?
Rahul Goel answers, vijay, hi. this requires comprehensive work... if i were to do this now, all other questions would be left unanswered! if you wish, email me your complete details and i will get in touch with you. my email id has been provided earlier in the chat.
Raj asked, Sir Very good afternoon. I am 34 yrs and just been suggested to take HDFC equity fund,Birla Midcap,JM emerging in Leads fund 2000,Reliance equity oppurtinity fund and Pru ICICI Dynamic fund for investment 2000 each along with Term insurance. My Monthly income is 50000 and expences are 25000. Should i go ahead and is this a right choice?
Rahul Goel answers, raj, hi. well, go ahead with the term insurance. with regards to the mutual fund portfolio, you can definitely do better... one option is to look out for an honest financial planner...
Raj asked, Sir Very good afternoon. I am 34 yrs and just been suggested to take HDFC equity fund,Birla Midcap,JM emerging in Leads fund 2000,Reliance equity oppurtinity fund and Pru ICICI Dynamic fund for investment 2000 each along with Term insurance. My Monthly income is 50000 and expences are 25000. Should i go ahead and is this a right choice?
Rahul Goel answers, raj, hi. well, go ahead with the term insurance. with regards to the mutual fund portfolio, you can definitely do better... one option is to look out for an honest financial planner...
Sriks asked, Hi Rahul. I have couple of ULIP plans from ICICI and ING VYSYA. How long due think should i keep them after lock in period of three years
Rahul Goel answers, hi. well what i would suggest is that if these policies do not fit into your financial plan, then do not pay the premium beyond the minimum premium paying term.
ala asked, Rahulji, I want to invest in Birla Sun LIfe tax releif 96 for getting income tax benefit, good dividend and also long term capital appreciation. Pls tell me is this O K or just suggest me better options.
Rahul Goel answers, hi. we prefer tax schemes like hdfc tax saver and franklin india taxshield. but before you consider investing in such schemes, please do ensure that they fit into your financial plans.
sharan asked, I am new to the investments.Yearly i can save 500K in the investment, please advise.Also i have sufficient insurance coverage
Rahul Goel answers, sharan, hi. best way to start is - a. educate yourself (read the money simplified guides on b. employ the services of an honest financial planner until you have this in place, do not invest any money.
anu asked, Hi sir, I am planning to take a term insurance , to whom i should approach,which is best.Pls suggest
Rahul Goel answers, anu, hi. any insurance broker should be able to provide you with a comparative chart of premiums across insurers...
ganesh asked, Hi .. I am 28 years old ... working in IT...take home 60k ... havent invested in anything except 9k/year LIC policy ..... spent money on my marriage, home and car .... I have home loan of 15 laks for past 3 years ... at 7.5 % fixed ... what is advisable for me ... prepayment of the loan or increasing EMI to reduce the tenure ... or keep the EMI as it is and start investing
Rahul Goel answers, ganesh, hi. are you comfortable keeping a liability on your books. if no, then repay the loan. if yes, then keep it.. the post tax cost of a loan is still attractive. and start investing! the sooner you start, the better it is... ofcourse, you need to be sure that you have done your homework before investing your first rupee!
raghvi asked, hello Rahul does Personal FN take on board budding financial advisors/planners? If yes, please let me know the process
Rahul Goel answers, raghvi, hi. yes, we do. send me your resume at! asked, Do you think it is wise to enter into market now through mutual funds (considering very much decrease in NAV) for fist time investor? And considering for long term like 5 to 10 years? If yes, which funds you suggest for people who can take much risk!?
Rahul Goel answers, sridhar, hi. the navs of funds go up and down all the time. you should not invest because of that. what you need to invest for is a purpose, an objective. once you identify the same, then plan and invest for it. there will be times when the markets fall irrationally.. those are times to add to your holdings. asked, How much of total income should used for ivestment ?
Rahul Goel answers, mayur, hi. save and invest as much as you can in your early years. the impact on your wealth in the long term can be simply amazing! asked, How much of total income should used for ivestment ?
Rahul Goel answers, mayur, hi. save and invest as much as you can in your early years. the impact on your wealth in the long term can be simply amazing!
sandy asked, Hi Rahul i want ti invest in Mutual Growth Fund a sum of Rs 20 lacs and having expectation to get double in 3 yrs tenure can u please suggest me some names?
Rahul Goel answers, sandy, hi. doubling your money in three years?!! at personalfn we definitely cannot draw up a plan for this!!
Rahul Goel says, Thank you all for participating in the discussion. See you all next week!

Chat with Rahul every Thursday, 1 pm

(Due to circumstances beyond our control, date and time of chat may change)