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Markets choppy, avoid tax-saving funds

December 26, 2008 08:59 IST

Are 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 Wednesday, financial planning expert Vicky Mehta replied to many such readers' queries. Here is the transcript:

vicky says, 
hi, good afternoon everyone .... lets begin ....

Sanjay asked, Whether it is wise to remove mutual funds and put it in banks ,at this juncture?
vicky answers,  at 2008-12-24 12:21:16hi, not necessarily ... the present market scenario has offered mutual fund investors the opportunity to make investments at attractive levels... however, if you are a risk averse investor and do not wish to take on the risk associated with market-linked investment like mutual funds, you would do well to steer clear of them
monfin asked, Hi Vicky..I want to invest around 1 lac to save tax. Can you please suggest how to divide this amount and where to invest the same so that i can get maximum returns in the long term.
vicky answers, hi, tax-saving funds (elss) offer tax benefits under section 80C of the income tax act. being market-linked investments, they are equipped to offer attractive returns, but then they also carry high risk levels... ideally, you should consider constructing a tax saving portfolio comprised of both assured return (nsc, ppf) and market-linked avenues. the allocation should depend on your risk profile ...
Ranvir asked, Bank FDs providing 10% returns per anum vs Stocks which are getting -ve returns but has the future potentials...Which one is better?
vicky answers, hi, the investment proposition offered by stocks is different from that of fds. while fds offer assured returns and capital protection, the upside is limited. stocks on the other hand can offer higher returns, but investors take on commensurate risk levels. the key lies in determining which avenue is suited for the investor and then making an informed investment decision.
Mallik asked, I am a long term investor and investing in Mutual Funds regularly for last 3 years. I also made some investment in shares. At current time, i incurred 20% Loss in Mutual Funds and 70% loss in shares. Even though analysts are advising to invest continuously in all market conditions, I observed that recent movements are favourable for short term trading. Every month we see some uptrend and down again. Do you advise cautious short term trading?
vicky answers, hi, no, i believe that investments in equities and equity-linked avenues (mutual funds) should be made for the long-term (at least 3-5 years).
sagar asked, how can we buy MFs online?
vicky answers, hi, you can invest using the online facility provided by most fund houses. that will also enable you to save on the entry load.
tripleR asked, hi, i would like to invest money on a monthly basis for an year and want to utilize that money at the end of year.. which is the best option to invest???
vicky answers, hi, 1 year is too short a time horizon for making equity investments. you can consider making investments in recurring deposit schemes offered by banks and post offices.
Rogue asked, Is it wise to invest in Mutual Funds(ELSS) now?
vicky answers, hi, sure. for risk-taking investors with a long-term investment horizon, now is not a bad time to start investing in tax-saving funds via the sip route ...
prakash asked, meaning of ELSS?
vicky answers, hi, elss i.e. equity linked savings scheme is an equity fund, wherein investments of upto 100,000 pa are eligible for deduction from gross total income under section 80C of the income tax act. the investments are subject to a 3-yr lock in.
Shankar asked, Hi Vicky, What is about Investment in Income Fund, I have heard it is Good time to invest in Income Fund, If Yes Can You please tell me till what time we should invest in these funds
vicky answers, hi, with interest rates being slashed, long-term debt funds have emerged as attractive investment options. however, investors must bear in mind that they are subject to interest rate risks and credit risk as well. the investment horizon should be atleast 12-18 months.
Tushar asked, Hi. Can you guide for Debt Instruments? Are they safe? We are aware of AAA+ ratings and all other stuff. But please do guide us clearlly, whether even it can get busted, like equity market.
vicky answers, hi, the safety of debt investments is determined by their credit profile. the ratings while indicative are certainly not guarantees; at best they are indicators. also credit ratings are subject to change.
SURESH asked, sir, kindly guide me for best investment for retired persons with tax benefits, thanks
vicky answers, hi, if you are above 60 years of age, you can consider opting for the senior citizens savings scheme.
jayeshshah asked, Sir, I have not made any positive returns inspite of investing for last 5 years via systemaic investment planning? Should I continue investments in stock market when you cannot make money via SIP over 5 years from bottom to hopefully a bottom?
vicky answers, hi, while investing via the sip route is always recommended, it is also important to invest in well-managed funds. simply investing via the sip route doesnt guarantee good results.
ashishrana asked, If i invest 5 lakh for 5 years in bank. Do i need to pay tax on the interest earned after 5 years
vicky answers, hi, yes the interest earned is subject to tax.
ISLAM asked, Pls suggest me a portfolio of 4 lacs.
vicky answers, hi, it is not possible to recommend a portfolio based on the investment amount. will need more information like your risk profile, investment horizon, existing portfolio, the goal that you wish to accomplish. can you pls write to me with details at
Gopi asked, hi, I would like to know about the UTI Wealth Buider Series II Fund. Is it the only fund existing in the market with a combination of equity,debt and gold portfolio
vicky answers, hi, the fund has been recently launched. investors would do well to study its portfolio management style and performance over a period of time, before making an investment decision.
anandtrivedi asked, hi, i would like to invest my father's money, he is retire and senior citizen, for getting regular Monthly income..where to invest ?
vicky answers, hi, at personalfn, we had dealt with this topic in an article some time back. to know more, please refer to
Jacquline asked, Sir, I am 25 yrs old, my husband earns a salary of Rs 55000/- every month. We want to start investing early, so that we can get some money, before starting a family. We always have a Rs 30000/- left over every month, but we both are clueless as to what to do with the money. We have invested in Metlife and LIC policies. Could you please advise us the way to go with investing? Where should we put our money? Don't know much about stocks. Please help.
vicky answers, hi, would recommend that you set yourselves investment goals and monetise them. also decide on the time frame over which you wish to accomplish the goals. the next step would be to select different avenues like mutual funds, fixed income instruments, among others.
Jacquline asked, Can you please suggest an investment which gives regular returns every month?
vicky answers, hi, you can consider the post office monthly income scheme; also, some fixed deposits offer a monthly interest payout option.
monfin asked, Hi Vicky.. Can you please some good term insurance plans to invest in so that I can get maximum returnns in the lonng run?
vicky answers, hi, term plans do not offer maturity benefits i.e. if the insured individual survives the term of the policy, he doesn't get any returns.
vicky says, hi, looks like we have run out of time. thank you all for participating in the chat. if you have any queries, please feel free to write to me at