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 rediff.com on Wednesday, financial planning expert Sailesh Multani offered some valuable tips. Here is the transcript:
Sailesh says, Good afternoon everyone lets start the chat session.
sesh asked, Is it the right time to invest in GOLD ETF. if no,then when will be the right time.
Sailesh answers, at 2009-12-02 12:57:55hi, in my view you should stageer your investment in gold over 6-12 months, buy gold on every dip. Do not rush in to buy gold.In my view all investors should have at least 10% exposure to gold. Gold acts as a hedge against inflation and an insurance when the world faces financial crisis. The best way of investing in gold is through the Gold Exchange Traded Funds (ETFs). Its easy to buy and sell gold through an ETF compared to physical gold. Also, the investor is assured of the quality of gold and saved of the botheration of safe keeping of physical gold.
VP asked, How does the mutual process work?
Sailesh answers, hi, in a mutual fund there is a professional fund manager who manages the portfolio. The mutual fund collects money from various investors and form a common pool and buy and sell securities as per the investment mandate given to the fund manager. The buying and selling of units happen at NeT Asset Value (NAV) calculated at the end of day.
AandP asked, Like stocks, is it important to keep booking profits in MutualFund also even though the investment is for long term or is it wise to just choose the growth option and let the money grow but just keeping an eye on the performance of the fund?
Sailesh answers, hi, in my view if you have made more returns than expected then you should book profits. Profits should also be booked to balance your portfolio from time to time. Every time you consider booking profits take into account the tax implications and transaction cost. It is important to monitor the portfolio on a regualr basis and best to review your portfolio at least once in 6 months.
Suhas asked, Hi Saileah, this is suhas here, i invest around 10k monthly on mutual funds, i am planning to invest another 5k monthly, can u pls suggest me on this.
Sailesh answers, hi, yes its a good idea to invest another Rs 5,000 by way of an SIP. IT will ensure that you average out your buy price over the long term. Equity investments especially require 4-5 years to grow. Having said that, I would recommend that you make an investment plan for yourself and invest accrodingly. Your investments should help you meet the financial goals you have set for yourself.
Pradeep asked, Sir, This is the first time I am going to Invest in the mutual fund so please suggest which fund will be good to invest?
Sailesh answers, hi, since you are a beginner, I would recommend that you start investing in mutual funds through SIPs. If you are investing for your long temr goal like retirement then investing in equity fund makes sense. Start with well managed diversified equity funds that have a consistent track record of alteast 5 years to show for. You can consider investing in HDFC Equity Fund and Franklin India Bluechip Fund, among others.
atif asked, sir i want to know that the new axis bank mutunal fund NFO which is coiming should i invets on shrt term basis., i looking for invest rs 50k for a period of 1 year
Sailesh answers, hi, AXIS MF is a new entrant in the AMC busienss. I would recommend that you wait and watch the performance of this fund house for atleast 3 years. Rather, you should look for funds with history of 3-5 years to show for.
kumar asked, Is it a wise idea to invest in gold no. If yes which is the best fund? pls advise
Sailesh answers, hi, its a good idea to invest in gold. Among various ETFs I would recommend that you opt for Quantum Gold Fund
aaa asked, MY salary 25K, Age 26 - I have 2 LACS cash in hand... Pl. suggest some good investment to get good return & i am also planning to buy my own flat cost around 20LACS --- within in what time i can make this money & HOw??
Sailesh answers, hi, the answer to your question lies in doing a comprehnsive investment plan for yourself. The plan will help you in deciding how much to invest on a monthly/annual basis for each goal. IT will also help you in deciding the asset allocation you should follow every year.
rabinPanda asked, Which ULIP is good? Shall i go for a plant having short duration of premium i.e only for 5 to 6 years or a longer one.
Sailesh answers, hi, in my view if you are buying a ULIP plan to meet your long term goals then it may not be the ideal investment. ULIPs combine investment with insurance. The best strategy is to keep both insurance and investments separate. For investments you should try and build a portfolio of equity funds. For insurance always opt for term plan. It gives you higher risk cover for lowest premium.
VICKY asked, Hello Sir , which are best MF for tax saving , I am invested in DSP ( G ) , S.N.P. ( G ).
Sailesh answers, hi, you can consider fund like HDFC Tax Saver among others
ashish asked, Hi Sailesh is there any good MF For Childs Feature..
Sailesh answers, hi, yes there are funds dedicated for children future planning. However, you can consider investing in a regular diversified equity fund.
Guru asked, what about DSP Tiger growth mutual fund, as i purchsed some units via SIP?should i sell it
Sailesh answers, hi DSP BR TIGER fund is a thematic fund. IT invests maninly in sectors that make the infrastructure theme. Since the fund manager has a restricted universe to choose from, the fund may under perform when the underlying sectors go out of flavour. Hence, it is always advisable to invest in dieversified equity funds which will have exposure to infrastructure secotrs should the sector hold promise from the future point of view.
jatin asked, sir, on what ground one can decide weather to go for "Growth" or "dividend" option, & if its dividend then "divedend payout" or "divident re-investment" and are there any other options rather than the mentioned above ? and also weather do we need to invest Lumpsum or in SIP format ?
Sailesh answers, hi, if you are lookng at regualr cash flows then dividend payout option is the best. IF you want your money to grow and capture the power of compounding then growth option is better. Dividend reinnvestmen and growth option are similar. In growth option your NAV continues to grow while in diviedend reinvestment, the dividend earned by you is reinvested into the fund. Here the units keep increasing
kannanr1 asked, Hi Sailesh, I am 26 M, not married. I am planning to start investing for my retirement. Current I have about total 1 Lakh investment in these MFs and I am continuing to invest in them through SIPs DSP-BR India T.I.G.E.R -RP HDFC High Interest - STP (G) HDFC Top 200 Fund (G) HSBC Equity Fund (G) ICICI Pru Infrastructure (G) I want to maintain an 80 -20 equit debt ratio as of now and later change accordingly. For a long term investment like Retirement, should I stick to these funds for really long term like 10- 15 years?? Or Should I go for a new ULPP or ULIP?? Please suggest some more MFs for long term growth (10-15 years). Thanks, Kannan R
Sailesh answers, hi, in my view you have a good porfolio of mutual fund schemes. You have a higher exposure to thematic funds like DSP BR TIGER and ICICI Infrastrucutre. In my view you should restrict the exposure of these funds to 10%. Add few more diversified equity funds to your portfolio. As far as ULIPs are concerned, I would not recommend them. Rather go for term plan. You can ad HDFC Equity and Franklin India Bluechip Fund to your portfolio.
Sankara asked, I have started a SIP in Birla Mid cap fund. How good this fund for long term planning?
Sailesh answers, hi, this is a good fund. Since its a pure midcap fund, I would recommend that you restrict the exposure to 15% of your overall equity portfolio. Add more large cap funds to your portfolio.
arjun asked, at present i am investing in HDFC TOP-200, SUNDARAM MIDCAP, BIRLA SUN LIFE FRONTLINE EQ PLAN - A, ICICI PRU DYNAMIC AND RELIANCE REGULAR SAVINGS FUND IN DIFFERENT DATES OF THE MONTHS.IS IT OK
Sailesh answers, hi, yes its a good idea to spread your investments over the month. This way you can possibly cash on to the good buying opportunites that may present themselves during the month.
AandP asked, What is the ideal asset allocation for a 35 year old working professional with 2 kids considering investments in equity , debt, gold, real estate and PPF?
Sailesh answers, hi, there is no idea asset allocation but most investment advisores follow the thum rule - 100 minus your age should be invested in equity and the balance in debt. This rule can at best be a starting point. The allocation will vary from investor to investor. The logic behing this rule is that when you are young, your risk appetie is high and you have time on your side for invesments to grow. As you grow in age, you should reduce your allocation to high risk investments and increase the same in low risk investments like debt. You can allocated 5% to gold.
saby asked, What is a debt fund?
Sailesh answers, hi, a debt fund is a fund that invests in low risk, interest bearing securities like, money market instruement which include Treasury Bills, Commercial Papers, Certificate of Deposits, Non Conertible Debenetures, Bonds issued by PSU Companies and long term government securities. These are good for investment when interest rate in the economy are expected to go down.
Ramsden asked, Hi: I am 30 years, married and have 2years old son. I get 60K/moth to my hand after all cuttings. 10-15K is monthly household expenses. I have policies: ICICI MFs for 1.75 L annual premium and 1 L LIC annual premium. What else do you suggest me to be richer? What is best pension plan and best child plan? I am moderate risk taker.
Sailesh answers, hi, the answuer to your question lies in making an investment plan for yourself. The plan will suggest how much you need to save on a monthly basis for each goal. It will also tell you the best investment product in each asset class. As far as pension plan is concerned, these are not the ideal products for retirement.
rahulkumar asked, Hey Sailesh, Now the market looking good these days & catching up slowly & most of the scrips or Mutual Funds coming to their 52 week high, is it a good time to buy these at present or one should wait for some corrections.If yes then how long one should wait ?
Sailesh answers, hi, from long term perspective markets are looking funamentally strong. If India continurs to grow at 6% p.a. then one can expect 12%-15% returns from equity funds. Having said that, I would suggest that you stagger your investments and not invest the entire amount in one go. Best is to invest via the SIP route
Karthik asked, Do you advise in Liquid Funds for short time horizons? If so, which are the best performing funds? Please advise
Sailesh answers, hi, liquid funds are good for investment horizon of less than 6 months.
Kabir asked, What is the difference between SIP and a regular mutual fund like HDFC Infrastructure fund etc? Why SIP is good for beginers? Thanks.
Sailesh answers, hi, SIP is a method of investing in a particular fund. It applies to all mutual fund schemes. In the case of SIP, the investor invests a specified sum of moeny into a specified fund on a specified date. SIP is good for all type of investors, be regular or beginners. SIPs help you average out the cost of purchase over the long term. Its advisable to continue your SIP for atleast 3 years to benefit from rupee cost averaging.
Rao asked, I am 61. Plan to retire at 65. Now I have FDs worth about 10 lakhs with interest rates from 6% to 7.5%. Should I invest in Mutual funds thru HDFC bank or Citybank? How muc will be good and safe
Sailesh answers, hi, before you entrust your money to any investment advisor, I would recommend that you think through your investment objective. If your investment objective is to earn regular income with safety of capital, then the best invesment product is Bank FD. You can also opt for 9% Senior Citizen Savings Scheme that pays you interest every quarter. Investing in mutual fund schemes like MIPs etc will not ensure assured and risk free returns
Naveen asked, Hi Sailesh, apart from the risk factor, how good is to invest in MF thru SIP for 15 years or long than in PPF ???
Sailesh answers, hi, in my view every investor needs to build a diversified portfolio comprising of equity, debt, gold and real estate. While PPF is a good investment the interet rate is fixed. Investment in equity funds through SIPs for 15 years is an ideal way to buld wealth as equity investments take long to grow
Sailesh says, We have run out of time. I thank you all for participating in the chat. If you have any further queries, you can write to me at : info@personalfn.com