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How to invest smartly and become rich

April 22, 2011 08:18 IST

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, financial planning expert Sailesh Multani offered some valuable tips. Here is the transcript:

Sailesh says, Hi, good evening and welcome to this chat session

NRAO asked, Sir, When I am investing either short term or long term not giving good returns even two to three years horizon. Can I test SIP route
Sailesh answers,  at 2011-04-21 15:58:52Hi, SIP is one of the simple ways of investing in equity oriented funds. With SIP you need not worry about timing the markets. It develops the most important virtue required for investing i.e. discipline. Just select the fund that is best suited to your needs, risk and investment horizon and start the SIP. Continue your SIP throughout the market cycle. It is often observed that investors stop their SIPs once the markets start going down. SIP works when investment is made across the bull and bear cycle. Start SIPs in well managed diversified equity funds with a minimum track record of 5 years. I recommend the following funds – HDFC Top 200 Fund, DSP BR Equity Fund and Fidelity Equity Fund. Investors planning to start SIPs in equity funds can consider adding the aforesaid funds to their portfolio. Please note that it is always better to invest in equity oriented funds with an investment horizon of 3-5 years.
red asked, Is it right to enter gold and silver market with the current scenario? what method shud b implemented for investment i.e physical form, etf etc?
Sailesh answers, Hi, in my view every investor, irrespective of age and risk-profile, should have atleast 10% allocation to gold. Gold is a precious metal and will always remain in short supply. It is the most sought after asset class in times of financial distress like the one we witnessed in the year 2008. Moreover, it is a store of value. The value of gold in terms of goods and services it can buy has remained constant over the centuries. Therefore, investment in gold also serves as a hedge against inflation. Gold as an asset class is less volatile compared to other asset classes like equity, debt and real estate. It can be used to diversify one's portfolio to bring in more stability in returns. For investors who are planning to invest in gold, it makes sense to invest in gold today. However, don't buy all the gold you want to add to your portfolio in one shot. Rather spread your investment over a six months time frame. I would advise investors to invest in Gold Exchange Traded Funds (ETFs) as against physical gold. ETFs are easier to buy and sell. Please keep in mind that you will need to open a demat account compulsorily if you want to invest in Gold ETFs. Even Silver looks promising but unlike Gold ETFs there are no Silver ETFs in the country. Therefore the only option to invest in silver is to buy physical metal or silver futures from the commodity exchange. Retail investors would be better off buying physical metal rather than buying silver futures.
Pawan asked, Do you agree with mutual funds offerring highest NAV of 7 yrs types?
Sailesh answers, Hi, just to correct your question a bit, highest NAV products are offered by insurance companies and not mutual funds . These products are essentially ULIPs and definitely not recommended. I would always advise investors to stay away from ULIPs and choose Term plans to insure their lives. For wealth creation equity mutual funds are the best investment vehicle. SIP is the most simple and preferred way of investing in equity funds.
Sailesh answers, Hi, please exit all JM Funds first thing tomorrow morning. JM funds are definitely not among the top performing funds. Get out of these funds and consider investing in funds that I have recommended earlier in an answer in this chat asked, is ppf is worth and too safe for investments
Sailesh answers, hi, PPF is among the best debt instruments curently. Apart from tax savings, it offeres tax free interest @ 8% p.a. which is compounded annually. in my view all investors should have an allocation to PPF. In fact all the family memebers should have an PPF account.
RAJIVSAHOO asked, Hello sir,is it ok to invest in birlasunlife's systematic investmentplan
Sailesh answers, hi, you havent mentioned the schme name. But you can select the fund with a good track record like Birla Frontline Equity Fund to start an SIP into
shankar asked, what are the hidden charges of investing in Gold Etf and also can we invest silver in Demat account or else what is the method of investing in silver
Sailesh answers, hi, apart from the fund management expensses,demat charges and brokerage there are no other charges or expenses associated with investing in Gold ETFs. for investing in silver you either need to buy it in physical from or invest in silver futures.
SANTHOSH asked, Kindly suggest me child policy with ULIP is good or not ? because I have taken 2 policy one from Birla Sunlife & Bharati AXA for my sons.
Sailesh answers, hi, I have time and again advised investors against buying insurance plans to plan for their children's future. to meet the long term goals of your children, you need to start SIPs in diversified equity funds. Buying an insurance plan will not be of much help and certainly not the ULIPs. Since you have already bought the ULIPs, you are advise to continue with the plan till maturity but dont buy any insurance plan for your child.
vicky asked, Iam in short position in silverm June ..its giving huge loss of 180000 what should i do now?? should wait further?? or exit??? iam in trouble....
Sailesh answers, hi, you can get rid of your trouble by booking the loss in silver. You are moving against the tide which may prove to be too costly in the future
philip asked, I have a 5 yr term of rs 1000 and a 1 year of rs 2000 SIP in TATA infra growth 5 yr is getting over in Nov 11 and 1 yr is getting over in may kindly suggest should i stay invested or come out kindly suggest other good scheme
Sailesh answers, hi, infrastructure funds are not among the prefeered funds when it comes to investing in equity funds. These funds do well only when the infrastructure related companies do well. It is always better to give more flexibility to the fund manager to pick and choose those sectors which look promising in the future. That is why I lay emphasis on diversified equity funds which can invest in stocks across the sectors.You need to get out of TATA Infrastructure Fund and invest in large cap biased fund like HDFC Top 200 fund
svmurthy asked, How to divide savings in PPF ,MF, SIP with 1.5 Lac. to save tax
Sailesh answers, hi, to save tax you can invest Rs 50000 in PPF, Rs 50,000 in Equity Linked Savings Scheme (ELSS) and Rs 20,000 in Tax Saving Infrastructure Bonds. The balance Rs 30000 can be used to pay medical insurance premium for yourself and your parents.
hevendra asked, which is best ULIP now?
Sailesh answers, hi, ULIPs are not among the preferred investment or insurance products. Therefore the question of best ULIPS does not arise. ULIPS typically take 7-8 years to break even. This is beacause of the very high administrative cost in the initial 3 years. Stick to mutual funds for investments and Term plans for insurance.
akmishra asked, how to build a corpus of 1 crore within 20 years? where and how much to invest to meet the target?
Sailesh answers, hi, you need to invest a sum of Rs 13,200 apporx. in a mix of equity and debt funds to reach the target of Rs 1 crore in 20 years. this is assuming a 10% reutrn p.a. on your investments.
KSR asked, my son wants to start investing in MFs. He is 26 years old. Please suggest 3 funds . The time horizon can be 5 to 10 years.
Sailesh answers, hi, i have given the names of the funds I like in the first answer of this chat. Your son can start SIP in those funds.
Sailesh answers, hi, way too many mdcap funds in your portfolio like Reliance Growth, Sundaram Midcap and IDFC Premier. Please exit anyone of these and Mirae Opportunities and reinvest in Fidelity Equity Fund and Franklin India Bluechip Fund.
manisha03 asked, We have a child plan for our 6 year old with Birla sunlife. We are paying 10k a month into it. Till date we have paid about 4,60,000 and it is down by a couple of thousand. The insurance on it is 13lakh. Total assured payable would be about 27 lakh, 19 lakh when he is 18 and balance in instalments. Do you think it is a good option or should we invest elsewhere?
Sailesh answers, hi, I can certainly say with confidence that no insurance plan can be more efficient in growing your money compared to equity funds. I would advise you to continue with the insurance plan but going forward please dont buy any more insurance plan to plan your child's future. You will be better off start SIPs in diversified equity funds.
NJ asked, What is the best way to invest NRI Money around (2M)
Sailesh answers, hi, you can certainly invest in mutual funds in India without any restrictions except for the fact that you need to be KYC complianct and have an NRE and NRO account in India. The choice of funds will depend on your investment horizon and risk tolerance. If you are willing to invest for 5 years and more and willing to take risk then equity funds would be the ideal choice. It would be better to divide your portfolio between equity, gold and Debt.
cpbhatia asked, Sir, suggest me good gold etf fund
Sailesh answers, hi, I recommend Benchmark Gold ETF
vishal_570in asked, Sir, I have invested in Reliance Opportunity Growth fund as SIP since April'2007 to April'2010 for 37 Months Rs.1000/- monthly and has kept hold on it. How long should I continue Holindg ???
Sailesh answers, hi, in my opinion you should exit this fund and reinvest in HDFC Equity Fund
vivek_k1047 asked, Hello sir, I want to invest in mutual funds. Please suggest me some promising mutual funds that can save me taxes as well.My planning is to put Rs.20000 to 40000.
Sailesh answers, hi, in the tax saving category which is known as ELSS, I recommend Fidelity Tax Advantage Fund.
nitinkdhiman asked, Is it correct to exit from ELSS schemes now as they are not covered in DTC?
Sailesh answers, hi, if your past investments are doing well then it makes sense to remain invested. DTC should not be the guiding factor in this regard.
Tarun asked, Sir, I am a regular SIP invester in SBI Magnum Tax Gain - Growth. It's been 3 years since i am investing. Please let me know whether i should withdraw the amount for investing in any other MF say HDFC Top 200 or do i continue with the same
Sailesh answers, hi, it would be a good idea to exit Magnum Tax Gain and reinvest in HDFC Top 200 fund.
skp asked, Hi, i have a running home loan ( 28 lacs). Is it a good idea to transfer my PF money into home loan? Also, around 30 % of my salary is going into EMI. what kind of investment is best for me, looking at a horizon of 5 years
Sailesh answers, hi, I would not advise you to use your PF money to reduce your home loan. For 5 years you should consider investing in equity funds via the SIP route.
shailesh asked, I am investing in Taurus Ethical fund monthy 2000 SIP. Please let me know if I should continue in this fund for long term (5years). Further I want to invest another 2000 SIP. Kindly suggest a good mutual fund.
Sailesh answers, hi, I would advise you to get out of this fund invest in funds with a longer track record like HDFC Top 200 or DSP BR Equity Fund.
rohit asked, is it true that if we trade in futures and options we can earn good money...and low risk
Sailesh answers, hi, this absolutely FALSE. Futures and Options are derivative products and should be used for hedging the risk that the portfolio carries. Unfortunately, people use these products to make quick gains. These are very risk investment options and retail as well as High Networth Investors (HNI)are advised to stay away from them.
AMITP asked, Hello Sir ,My age is 39 Yrs.Last yr I have started investing in SIP Rs 1500 in HDFC TOP 200,1000 in HDFC Prudence,1500 in Reliance Growth ,1000 in Reliance Regular Savings. Should i exit from Reliance Growth & Reliance Regular Savings
Sailesh answers, hi, you can exit Reliance schemes but dont exit if you have to pay any tax or exit load. Once you have exited you can invest in better fund like the ones recommended at the start of the chat
Babu asked, Hi Sir, I do invest in share market and I have shares of Suzlon, NHPC, DLF and Unitech in my portfolio... all of them are in red.. what do I do?
Sailesh answers, hi, in my humble opinion you should exit all the stocks you have mentioned. If you are unable to manage your stock portfolio, please take the equity fund route. Let the professional fund manager decide which stocks to buy and sell.
walia asked, HI Sir, please advice your thoughts about these 2 funds : pramerica dynamic fund & L&T opportunities.
Sailesh answers, hi, I do not track these funds. Therefore I cannot comment on these funds. I can only say that if you are building a portfolio of equity funds then you should consider the funds I recommended at the start of this chat.
vsahdev asked, Hi Sir, I am 61 years old.. can spare abt Rs. 5000/- pm per month.Pl suggest suitable instrument. Am already saving Rs. 1 lakh under sec 80D.
Sailesh answers, hi, if you are willing to take some degree of risk and invest for 3 years then consider starting an SIP in HDFC Prudence Fund. This is a balanced funds which typically invests 70% of the corpus in stocks and rest 30% in safer instruments like government securities and company debentures.
bobby asked, Hi, i am currently investing 4000 per month in SIP mutual funds viz HDFC TOP 200,HDFC Equity,Birla Sun Life & Fidelity & i still can invest Rs 3000/- per month.what do you recommend?
Sailesh answers, hi, add DSP BR Equity Fund
Tinya asked, I am looking for good investment plan to invest 50k, wherein I expect atleast 15% returns. Can you suggest any MF/PPF/SIP/FD ?
Sailesh answers, hi, you can expect 15% returns only from equity funds. That too only if you are willing to take risk and stay invested for atleast 5 years.
Alex asked, Hi Sailesh, Would like to know about your opinion in investing in NPS(national Pension Scheme?
Sailesh answers, hi, as of now I am advising investors not to invest in NPS. I would like to wait and watch the performance of the funds and then take a call. Till then investors are better off investing in conventional investment instruments like PPF, Bank Fd, Equity fund and Gold ETF.
Shaiu asked, Sir I want to know where to invest retirement money
Sailesh answers, hi, assuming that your retirement corpus should earn regular income for you, you should consider investing in Post Office Monthly Income Scheme. Besides this , you can invest in Bank Fd. If you still have surplus then you can invest in equity funds. For equity funds your investment horizon should be atleast 5 years. It is always preferred to have 15-20% allocation to equity funds as these funds have the potential to deliver returns that can beat inflation.
amrich asked, Sir, How is the New "LIC-Nomura Fund."
Sailesh answers, hi, I would like to wait and watch the performance of this fund house before recommending any fund to the investors. till then investors would be better off investing in funds from established fund houses like fidelity, HDFC, DSP Blackrock among others
swaroop asked,  hi mom has just retired... having around 15 lacs...kindly advice where to invest
Sailesh answers, hi, you can invest arounf 80% of the retirement money into safe and assured income yielding products like post office monthly income scheme and bank FDs. You can invest 15-20% in equity funds. If she is a senior citizen i.e. 60 years and above then she can even invest upto Rs 15 lakhs into 9% Senior Citizens Savings Scheme.
harpreet asked, what's your take on reliance rsf balanced(growth) and icici pru infra (G)?I have regular SIPs in both.
Sailesh answers, hi, I would have preferred HDFC Prudence Fund which is by far the best balanced fund in the cateogry. I would advise you to exit ICICI PRU Infrastructure Fund and invest in diversified equity fund like Fidelity Equity Fund.
KAUSHIK asked, Hello Sir, I have invested in DSP BR equity fund,, HDFC TOP 200,, HDFC PRUDENCE,, SBI CONTRA MAGNUM,, UTI DIVIDEND YIELD FUND,,CANARA ROBECO INCOME FUND & HDFC MIP LONG TERM,,, Sir,,Should i hold my investment ? Kindly suggest other good MF for me to invest
Sailesh answers, hi, except for Magnum Contra, you can hold on to all the other funds in your portfolio.
Narayan asked, Sir, Please advice me where to invest 2L in long term for good returns with moderate risk.
Sailesh answers, hi, if you are willing to invest for 3 years and more then the best option for you would be DSP Balance Fund and HDFC Prudence Fund.
rajatkumar asked, age 29, married and kid, looking for 4cr after 30yrs. My Investments Rs. 2000/- each for ICICI PRUDENTIAL DISCOVERY FUND -GROWTH, BIRLA DIVIDEND YIELD PLUS - PLAN B ( GROWTH ) , HDFC TOP 200 FUND - GROWTH PLA, HDFC PRUDENCE FUND - GROWTH PLAN, ICICI PRUDENTIAL DYNAMIC PLAN GROWTH, HDFC EQUITY FUND - GROWTH PLAN, FIDELITY EQUITY FUND GROWTH, please suggest if its fine or should i add or cut any.. investing since last 1 yr.
Sailesh answers, hi, please mail me your query separately at:
harshit asked,  I am investing 2500/PM@DSP BlackRock Opportunities Fund - Gr and 2500@ Sundaram BNP Paribas Select MidCap-Gr for 10years can i continue for these funds?
Sailesh answers, hi, you can continue in these funds.You should add other funds as well like Franklin India Bluechip and HDFC Top 200 Fund.
krissss asked, Hi Sir, Currently I invest 20K every month in different categories of Mutual Funds: Mid & Small Cap Franklin Prima Fund Multi Cap Templeton Growth Fund Large Cap Franklin Blue Chip Fund Multi Cap HDFC Growth Fund Large & Mid Cap HDFC Top 200 Multi Cap HDFC Equity Fund Mid & Small Cap Reliance Growth Large & Mid Cap Reliance Vision Large & Mid Cap Benchmark S&P 500 Request you to suggest that: the kind of approach is correct or not.....? Thank You MS Krishna.
Sailesh answers, hi, prima facie your portfolio looks ok to me. I alwys prefer to keep the exposure to small and midcap funds at 20% of the overall equity fund portfolio.
maverick asked, Hi I will complete 3 years in May for Elss Franklink india tax sheiled and hdfc long term should i exist these please advice
Sailesh answers, hi, both these funds are good. Hold onto them
Sailesh says, We have run completely out of time. I thank you all for participating in this chat session. If you have any questions which were not answered during the chat, you can mail them to me at: Please mention your age and current asset allocation