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Home > India > Business > Business Headline > Personal Finance

New to mutual funds? Go for SIPs

April 04, 2008 09:27 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, mutual fund expert Rahul Goel replied to many such readers' queries. Here is the transcript:

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

Param asked, Hi Rahul, Looking for some insider info :) - any idea when Quantum is coming up with its Debt or Real Estate Fund?
Rahul Goel answers,  at 2008-04-03 12:52:20param, hi. Quantum Mutual Fund is a different entity from Personalfn. request that you post your query to Or you may want to visit their website at

Ismail asked, I am just startin off with investment and can put aside 2k every month. what would u recommend.
Rahul Goel answers, ismail, hi. since you may not be able to afford professional help to begin with, best would be to invest in well managed diversified equity funds like hfdc top 200 and a value fund like quantum long term equity fund (disclosure - Personalfn and Quantum Mutual fund share the same founder - Ajit Dayal). the idea is to have a mix of well managed funds... a max of 5/6 over time. i am assuming here that you are going to be invested for the long-term and have appetite for risk.

JEEVANDEEP asked, Hi,This is JD,29,S/W professional. I wanted to do invest in 2-3 non tax saving mutual funds(SIP) for long term. Can you please suggest me some of the best funds for that..
Rahul Goel answers, jeevandeep, hi. before i recommend the scheme to you, i want to know a couple of things. one, why you wish to invest? two, do you have appeite for risk? three, how is your current asset allocation? questions like these will help me guide you better. note that a lot of people simply pick and choose schemes in isolation... this at times can lead to a situation where over time you find that the direction in which you have moved along is not something that was best for you. i suggest you read the money simplified, a free guide on, to help you with this entire process.

DAS asked, Dear Sir, I have three SIP's running each of 25K for the following funds: HDFC top200(g), ICICI pru Power(G), Reliance Growth Fund-retail Plan(G). I have started one year back & will continue the SIP's for three years. I will remain invested for minimum of 5 years. What's your opinion on these funds. I want to start another 25K per month, would you please suggest one MF. Many Thanks
Rahul Goel answers, das, hi. of the three that you have mentioned, we recommend only hdfc top 200 to our clients (selectively, of course). the portfolio we would have liked to you have would have had about 5/6 schemes... on the likes of hdfc top 200, dsp opportunities, quantum long term equity (see disclosure earlier) and maybe a mid cap fund like sundaram select midcap, but that in a very small proportion if at all. so, maybe you want to take a re-look at your portfolio instead of just planning to invest another rs 25,000 pm in another scheme.

atul asked, Hi Rahul, i am new to mutual funds and am planning to start 2 SIPs starting next month in preferably two different funds, i want to invest in funds which has high returns with moderate risk and good returns. Please Suggest.
Rahul Goel answers, atul, hi. before you invest a single rupee, make sure you have the answers to the three questions i have asked earlier - why invest? appetite for risk? current allocation of assets? i recommend you read up on this if you are unable to afford the services of a financial planner. start with the money simplified on personalfn.

manikandan asked, Hi, I am Manikandan. Can u suggest on investing in gold.
Rahul Goel answers, hi. we have always recommended gold as an integral part of an individual's portfolio. in general, one should have about 5% of their total assets in gold. you can read more about this in much more detail on

jeewan prakash asked, What are the crieria for evaluating a fund?
Rahul Goel answers, jeewan, hi. well, there are several. some of these include - the risk adjusted performance of a fund over a stock market cycle, the performance of a fund in a sell-off like we have witnessed recently, the construction of the portfolio (how many stocks, quality of stocks), the track record of the fund manager in terms of not only delivering performance but also sticking to his mandate.

Riyas asked, Hi Rahul, Can you suggest some good MFs that would return 20 to 35% annual return for 3 to 5 years. Thanks.
Rahul Goel answers, riyas, hi. in our view one can earn a return of about 15% CAGR over the next 3 - 5 yrs by being invested in well managed diversified equity funds. 35% in our view is highly unlikely.

Riyas asked, Hi Rahul, Let's say you have 3 lakhs amount. when you invest in MF, what kind of portfolio you would like to have in MF for good returns for 5 years?
Rahul Goel answers, hi again. in an earlier response i have dealt with this. pl refer.

Swap asked, HI As market so volatile , do you suggest 10 yrs SIP with the funds? As risk is so high on parking fund for long time ?
Rahul Goel answers, hi. sips in our view should be entered for 12 months at a time, and then renewed. you should use the renewal as an opportunity to review the portfolio. sips are a great way to invest in our view. if the environment is volatile, then sips is probably the best way for most investors.

Riyas asked, Hi Rahul, what is the best time to invest in MF. Is this the right approach to buy more MF unites everytime when there is a big correction like (3 to 4% down) in the market.? Thanks
Rahul Goel answers, hi. it may be best to follow an sip approach. you invest the same amount of money every month.. spread this out on different dates so that you benefit from intra month volatility. if markets a lower you will get more units; if they are higher, you will get fewer units... it works automatically.

Riyas asked, Hi Rahul, In this current market situation, what kind of MF you prefer that would have less risk and high returns for 5 to 10 years. What would be most attractive industry in india for another 5 to 10 years for the investment. Thank you very much.
Rahul Goel answers, hi. if you have appetite for risk, and your asset allocation permits more exposure to equities, then in our view diversified equity funds should account for a significant portion of the portfolio. gold can be added as it sort of acts like an insurance.

vgopal asked, Hello sir, I have two 3 SIP's running each of 2k for the following funds: UTI Infrastructure fund, Relinace Growth Fund and Sundaram Midcap Growth funds. Pls suggest on the funds and chnanges required if any ?
Rahul Goel answers, hi. you own an infra fund, and two mid cap fund. this is almost like a speculative portfolio. not sure what objectives you have, but maybe you need to have a re-look at your portfolio.

Jeevan asked, Hi, This is Jeevandeep.You had asked me some qns in your answer. 1. Why you wish to invest :: For future security 2. Do you have appeite for risk :: Moderate 3. Current asset allocation :: New to mutual fund.. Can you please suggest 2/3 funds pls..
Rahul Goel answers, jeevan, hi. i need to know your current allocation in terms of how much in equity (shares and mutual funds), debt, property, gold.

Deepa asked, Sir, I am 38 and my wife is 32. We have a 8 month old daughter. Our total income p.m. is 60,000. Our main asset is our 1bhk house into which we put in all our savings and it is now valued at 40 lacs. I pay 14500 p.m. towards EMI and more 20 yrs to go on this. I plan to retire at 55 & my wife at 50. Our savings as on today is 1 lac in ICICI Prudential; Life Insurance -- 6 lacs for me and 2 lacs for my wife. We need 4 crores at retirement to cover education and marriage of our daughter, a good post-retirement life for both of us and buy a 2bhk flat. How should I proceed to achieve this? Kindly advise.
Rahul Goel answers, is this rs 4 cr number adjusted for inflation. assuming it is, then you need to invest about rs 30,000 pm in assets which will earn you 15% pa over the next 20 yrs. initially you may not be able to set aside so much money... not an issue... you can always make up for the deficit as your incomes rise. to earn 15% pa you would have to have most of your portfolio in equity (shares/mutual funds).

Khan asked, Hi Rahul, I am 32, married, no kids, working as a software professional in singapore. I can save upto Rs 100000 per month. I would like to retire at the age of 50. BTW, i dont have insurance, i invested some amount in Stocks and MF. What would be your recommendation for the financial planning to get good returns after the retirements. If i want to get Rs 100000 per month afer my retirement. What should i do? Thanks.
Rahul Goel answers, Well i put these numbers into my calc and the answer was exactly what you would want to hear.. actually close to that. to earn an inflation adjusted rs 100,000 pm, 18 yrs from now, you need to save rs 107,000 pm now in assets which will return you 15% pa over the term of the investment. i think you should take term insurance, which will be very affordable. start your planning and execution now!

sumanth asked, i am planning to invest in mutual funds.But since i haven't invested previously in mutual funds i am finding it difficult to choose a mutual fund.Can you suggest how to invest in mutual funds
Rahul Goel answers, sumanth, hi. you could do two things. read up on funds to understand them better. or you could get yourself an honest and competent financial planner. if you wish to start reading, visit

raman asked, i want to invest rs-1 lac, which is better mutual fund or stocks and can wait for one year also. please advice
Rahul Goel answers, raman, hi. in our view neither stocks not equity funds are suited for a one year investment horizon. for equities, you need to have a minimum time frame of 3 yrs.

Pankaj asked, Hi I have five SIP's running- HDFC Equity (G) Rs5000, Frankline India Flexi cap Fund -(G)- Rs.5000. Reliance Equity Opportunity (G)Rs.5000, Reliance Vision Fund (G)Rs 3000/-, SBI M Mid Cap Fund(G) Rs. 3000/- ICICI Prudential- Infrastructure fund (G) 3000/-. I am 31 year old. Please advice
Rahul Goel answers, pankaj, hi. you have about 30% of your portfolio in thematic funds... vision is large cap fund and sbi is a mid cap fund. this needs to be toned down to maybe a max of 10%. 90% of your monies should be in diversified equity funds. while the choice of diversified funds is good (hdfc, franklin), in case of opportunities you can take a look at dsp ml opportunity.

Sona asked, Hi! I am invested in Reliance Vision Fund - Equity - Diversified, Reliance Diversified Power Sector Fund - Equity, DSP ML Tiger Fund - Equity & Fidelity Equity Fund - Equity? Does this look good to you?
Rahul Goel answers, sona, hi. we would prefer a much lesser exposure to thematic/sector funds... no less than 10%. in your case, most of your portfolio is accouted for by such schemes. you should take a relook at your portfolio and then decide whether or not this suits your profile and objectives.

RAGHU asked, Hi rahul, i wanted to start investment in MF through SIP route. I expect good appreciation in 5 years time span. I have appetite to take risk and have fixed properties/insurance cover etc
Rahul Goel answers, raghu, hi. well if that's the case then you can opt for diversified equity funds. you have not mentioned gold... do have some exposure to the same.

Jeevan asked, Hi< This is Jeevan, You had asked i need to know your current allocation in terms of how much in equity (shares and mutual funds), debt, property, gold. I have not started invstment yet.I have arnd 10L cash in hand which i can invest.
Rahul Goel answers, jeevan, hi. if you have a moderate risk appetite, and wish to plan for future secuity, and are yet to start investing, then maybe a good approach would be to invest about 60% of your monies in equity funds (not one time, but over say 6 months). 20 - 30% can go in to debt and other fixed income assets (PPF etc). then some could be invested in gold... you can hold onto say 5% for liquidity purposes. select your equity funds carefully; and do get yourself a term insurance.

Guru asked, I am developing a MF portfolio at present with a long term view (more than 5 years). My aim is growth of capital. Should I invest in equity / ELSS MF only or in balanced funds too? How about capital guarantee schemes? Please reply as this is very important for me. Thanks
Rahul Goel answers, guru, hi. if you have appetite for risk, and have a tenure of more than 5 yrs, then a predominantly equity fund portfolio is best. with regards to exposure to debt (via balanced/cap guarantee) you probably are already invsting in ppf/epf. this should take care of allocation to debt.

Ashok asked, Hi Rahul...Which is the best investment option in terms of returns?
Rahul Goel answers, ashok, hi. well, over time equities should outperform other asset classes. however, when investing, do not worry about who is offering the highest return. build a portfolio of assets, which will deliver an attractive risk adjusted return which suits your needs.

Rahul Goel says, Thank you all for participating in the discussion. In case you have any queries, or wish to meet a personalfn consultant, please write in to us at Thank you.

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