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Some golden investment tips

Last updated on: April 05, 2012 17:50 IST
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InvestmentsAre 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 on Thursday, speak to financial planning expert Sailesh Multani offered some valuable tips.

Here is the transcript:

Sailesh says, Hello & Good evening - welcome to this chat session

Sailesh says, For all those who are looking forward to recommendations on various types of mutual funds, here are my picks. In the equity fund category � HDFC Top 200 Fund, DSP BR Equity Fund and Franklin India Bluechip Fund.. In the balanced fund category, I recommend HDFC Prudence Fund. In the ELSS category � HDFC Tax Saver and Franklin India Taxshield
vin asked, I have 5 lakh I want to invest ..I was thinking to invest in gold ... what other suggestions you have ?
Sailesh answers,  at 2012-04-05 15:59:49Hi, you investments should be based on your investment objective / financial goal, investment horizon and risk tolerance. IF you are willing to take risk and invest for the long term, say, 5 years and more, then diversified equity funds should get higher allocation in your portfolio. Similarly, if you are looking at safety of capital with assured returns, then bank FD would be the ideal choice. An ideal portfolio should consist of all the major asset classes like equity, debt and gold. Allocation to gold can be capped at 10% of the portfolio. Allocation between equity and debt will vary with your risk tolerance and investment horizon.
sanjay asked, my salary is 9 lacs...what is my tax can i invest in what all avenues to reap max benefit
Sailesh answers, Hi, as an individual tax payer, you can avail of the benefits under section 80C and 80D among others. Both these sections provide for deduction from gross total income thereby helping you reduce your overall tax liability. Under section 80C you can invest in tax saving instruments like PPF, NSC, Bank FDs (specifically providing for tax benefit), Equity Linked Savings Schemes (ELSS) from mutual funds, among others. You can even claim deduction for payment made towards the life insurance premium paid. The maximum limit under this section is Rs 1 lakh. Under section 80D you can avail of deduction upto Rs 15,000 for health insurance premium paid. This is for you and your family. There is an additional deduction of Rs 15,000 for your dependent parent. IF your parents are senior citizens (age 60 years and above), then the amount of Rs 15,000 increase to Rs 20,000. Besides you can alos claim deduction for donation under section 80G. This
tanmaychat asked, Should we invest in National pension scheme at all. I have an investment of 1lakh p.a. and my gross salary is 24 lakhs
Sailesh answers, hi, I would not recommend investment in NPS. The track is not so good. Till then I would recommend conventional and traditional ways of accumulating your retirement corpus. Here I would like to add that I dont recommend pension plans from insurance companies. To plan for your retirement you should invest in EPF, PPF, bank FDs, diversified equity funds and Gold ETFs.
Aprajita asked, Sir, whenever I invested in share I get profit in some script and loss in some script and as net it is loss.Also in future and option also I am in loss.What to do for trading in cash and future and option and in day trading.
Sailesh answers, hi, the net result from trading in stock market in most of the cases is a loss. A lot depends on the luck and therfore trading in stock market is dangerous and not the advisable. Retail investors should stay miles away from trading. If you really want to make money from equity, you will have to be a patient investor in the first place. Second, you need to invest in best managed companies with potential to grow. Ideally, you should avoid investing directly into the equity market. Instead, take the equity fund route. SIP is the preferred way of investing into diverisified equity funds.
Balakumar asked, Hi, which will best pension plan investment ?
Sailesh answers, hi, I dont recommend pension plans at all. It is not the ideal way to plan for retirement. Instead one should get a retirement plan made with the help of a financial planner. The plan will tell how much corpus one needs to accumulate by the time he retires. The corpus should be large enough to last one's life time and generate regular and steady income sufficient to meet all possible post retirement expenses. An ideal retirement corpus would consist of diversified equity funds, bank FDs, EPF, PPF, FMPs and Gold ETFs.
jerry asked, Is it more beneficial to save on interest cost by paying back Loan or invest in Share market with time frame of 6 months
Sailesh answers, hi, without a second thought go ahead and repay your loan. I am of the view that one should have zero or minimum debt in portfolio.In your case it is even more necessary to pay off the loan because you want to invest in stock market and that too for 6 months. In my view the latter option would be totally disastrous.
multankasultan asked, hi, I have sIP in canara robeco equity tax saver , hdfc top 200 , dspBR top 100 , fidelity tax advantage, sundaram smile growth .should I continue with these sIP or stop any of them?
Sailesh answers, hi,in the ELSS cateogry I recommend only HDFC Tax Saver and Franklin India Taxshield. I would recommend you stop SIP in Canara Robeco Tax Saver. As far as Fidelity Tax Advantage Fund is concerned, it is by the best managed fund in the ELSS category. The fund has received several awards and for many years now. However, with the sale of fidelity's business to L&T MF, one would like to wait and watch if L&T can replicate the same performance. Therefore, I would advise you to stop sip in Fidelity Tax Advantage as well. Continue with SIP on the other funds.
Priyanka asked, What are the best bond funds good for 1-2 years timeframe? pl suggest
Sailesh answers, hi, ideally for 1-2 years investment horizon, income funds are good. But these funds do well only when the rate of interest is likely to go down. In the last one year, it has been widely expected that interest rates have peaked and that the RBI would initiate rate cuts anytime now. But with the recent announcement of government's borrowing prog for the current s financial year, it seems unlikely that RBI will be in any hurry to cut rates in a manner that would advnatageous for debt funds. Till the inflation comes under control, rate cuts are unlikely and therefore long term income funds are not advisable. Investors would be better off investing in FMPs or short term income funds. IF you are not a fan of market linked returns, then bank FDs would be ideal for you.
Janak asked, Should i still keep my investment with Fidelity which is taken over by L&T?
Sailesh answers, hi, while you can hold on to your existing investment in fidelity funds, you may avoid further investments till L&T proves its mettle by repeating the same performance as that of fidelity.
Nidhi asked, I am doing SIP in HDFC top 200(5k),HDFC Equity(4k),ICICI Blue chip(5k),ICICI Discovery(3k),Reliance GOLD(3k), also in PPF(2K) per month, I want to continue it for next 10-15 year my fund selection is OK? or some changes required to get good return?
Sailesh answers, hi, overall ok portfolio. Add funds from DSP BR MF also - DSP BR Equity fund.
dgdkd asked, Hello Sir, My Father(60 yrs) got Retired last month & have 20L.Please advice suitable investments which can fetch safe returns?
Sailesh answers, hi, your father can safely put away Rs 15 lakhs into 9.30% Senior Citizens Savings Scheme. you can visit any branch of State Bank of Bank of India to open an account in this scheme. This scheme pays interest everyi quarter which is taxable. The balance Rs 5 lakhs can be invested in 1-2 years FDs which are currenly fetching anywhete upto 10% for senior citizens. If your father is willing to take risk then he can even consider investing some money into diversified equity funds like HDFC Equity Fund and Franklin India Bluechip Fund with divident payout option.
kolp asked, what is your view on icici or sbi fmcg fund
Sailesh answers, hi, FMSG funds as the name suggests is a sectoral fund that invests only in FMCG stocks like colgate, HUL, Nestle, etc. These funds do well only when the underlying sector does well. Once the sector goes out of flavour, there is very little the fund manager can do but continue investing in the same sector. The fund manager does not have the mandate to invest in other better performing sectors. Therefore, I dont recommend these funds to investors. Of late, FMCG stocks have delivered handsome returns and therefore the performance of FMCG funds have stood out compared to other funds. I would still not recommend a sectoral fund and go with my conviction of investing in diverisified equity fund which will also invest in FMCG stocks albeit with a smaller exposure
Rajendra asked, Bajaj Life Insurance Co has cheatd me for Rs.4.00 lacs and is not rady to pay bak my money.I have contacted,had written complaint with the offcials at HO Pune.they are not at all responding.What shall I do to recover that money? Can you guide me?
Sailesh answers, hi, you can write to Insurance Regulatory and Development Authority (IRDA). You can even lodge an online complaint on the IRDA website. You can even approach consurmet redressal forum with your complaint.
Ehtesham asked, For investments which LIC policy is better?
Sailesh answers, hi, LIC stands for Life Insurance Corporation of India. you should turn to LIC only if you want to buy a life insurance plan. For investments you should be considering investment instruments like mutual funds, stocks, bank FDs, Golf ETFs. IF you are planning to buy an insurance plan, then go for Term plan. It offers higher sum assured for lowest premium.
Tuhar asked, My daughter is 10 years old now. I want 15 Lac for her marriage after 12 years. Please suggest investment plan for the same.
Sailesh answers, hi, assuming your investments grow at an average rate of 10% p.a. you need to invest a sum of Rs 5,500 per month to accumulate a corpus of Rs 15 lakhs for your daughter's marriage. This Rs 5500 should be invested in a mix of diverisifed equity funds, recurring deposit with a bank and Gold ETF. You may consider investing Rs 3500 in two equity funds recommended by me at the start of this chat, Rs 1500 in recurring deposit and Rs 500 in gold ETF.
Aprajita asked, Sir, I have SBI coma fund of Rs 10000,Tata infrastructure of Rs 40000,Fidelity IntenationalOpportunity fund of Rs 10000 and SBI multicap of Rs 40000.What to do?
Sailesh answers, hi, in my opinion you should consider liquidating your entire portfolio and make a new portfolio of funds recommended by me at the start of this chat.
bala asked, Is it a good time to invest in equity now? If not what are the best alternatives?
Sailesh answers, hi, if you are long term investor with an investment horizon of 5 years then you should certainly consider investing in equity markets. IF you are willing buy the India story which is all about domestic consumption, you can expect a nominal GDP growth rate of 12-15% p.a. A well managed diverisifed equity fund should easily generate a return of 12-15% p.a. for you. IF you are convinced then start investing today preferably through SIPs.
asm asked, Hi Sailesh, i had invested in SIP from last 4 years which is not performing well, I will switch to some other SIP,what to do with corpus collected durind this period.Approx 3L please advice?
Sailesh answers, hi, you have not mentioned the names of the funds you are invested in. If the funds are fundamentally strong then you should hold onto them. The equity markets have been in doldrum for the last 3 years and therefore you may not see much action in the form of returns. But it would still be advisable to get your portfolio checked by a trusted and competent investment advisor.
raj asked, at 32 years of age,unmarried,no major liabilities,hw shud i invest 12-15k per month.thanks
Sailesh answers, hi, you should be investing more in equity funds, say 70%. 15% can be invested into FMPs or debt funds and balance 15% into gold ETFs.
Deepu asked, In between LIC and EPF, which will give more benefit in terms of Insurance, Tax Deduction and good Return
Sailesh answers, hi, EPF is better as far as returns areEPF doesnt offer insurance be benefit. Turn to LIC only if you want to take a life cover to protect from the unfortunated even of premature death. In my view both are a must. Dont look only at the tax benefit. Regardless of the tax benefit both insurance and EPF should be there in your portfolio.
Ahsan asked, i took reliance equity opportunities dividend in 2007.No increase on NAV side.should i hold it
Sailesh answers, hi, in my honest opinion you should exit this fund.
srdubey asked, plz let me know how to withdraw PPF money after completion of 15 yrs.
Sailesh answers, hi, if you have completed 15 years, then you need to go to your bank and request for closure of account unless you are willing to extent the matuirty by 5 years. If you do not want the money, then you should certtainly extent your maturity by 5 years.
MJ asked, Hi, What is the advantage of SIP in a high market?
Sailesh answers, hi, equity markets are at best volatile. Therefore, when you invest through SIPs your every successive investment will be at a different NAV which may be higher or lower than the previous one. Over the long term, say 5 years, you will see that the average buy price has reduced. While markets may go up they also tend to go down. By buying units at a higher and lower levels you can avarage your purchase price.
nana asked, I have 30 lakh loan, where I can invest some money so that by that I can payback loan
Sailesh answers, hi, if you want to accumulate some money to repay your loan, then the best option would be a liquid fund or ultra short term liquid funds.
mayurttt asked, are ELSS preferable in terms of return over other MF schemes in long run say 10 to 15 years? Further inveting in ELSS is SIP or One stroke investment which is preferable?
Sailesh answers, hi, ELSS are like any other diversified equity funds except that they qualify for tax benefit. These have a lock in of 3 years after which you can exit them if they are not performing to your expecation. I would prefer SIP to lumpsum as one can average the purchase price.
Sailesh says, We have run completely out of time. I thank you all for participating in this chat. I look forward to meeting you next week and answering your investment related queries.

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