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?
Mutual fund expert
Rahul Goel answered to many such readers' queries in an online chat on Thursday. Here is the transcript:
Rahul Goel says, Good afternoon! Welcome to the discussion on financial planning!
Param asked, Rahul, What are your views on the SEBI proposal on removing entry load for direct MF investments? How does Personalfn plan to handle this change?
Rahul Goel answers, at 2007-12-20 12:58:55param, hi. the move by sebi is brilliant! as far as personalfn is concerned we are not in the business of executing mutual fund transactions. we help people plan their finances. yes, presently our clients do compensate us by transacting only the mutual fund investments through us even though we guide them with their entire asset allocation(they are free to transact the rest with whoever they choose to). we already have a fee based model in place and we are evolving this a lot more to suit our clients. we see this development as a huge positive for us!
Param asked, What do you mean when you comment that "We do not offer views on Reliance funds"? Are there any MF houses you recommend besides FT, DSPML, HDFC Std & Fidelity?
Rahul Goel answers, hi again. we follow a research process based on which we decide what we can recommend to our clients and what we cannot. we do not say that all schemes from a AMC are good. an AMC may be great in our view, but then it is highly unlikely we will recommend all their schemes. however, if the AMC does not pass our minimum criteria, then we do not recommend any scheme from their stable. having said that there are several AMCs out there which we think are worthy of our clients' monies.
Ravi asked, Hi, I am investing Rs.30k p.a in Birla Sun Life's FlexiCash Flow, its a ULIP, for 15 yrs, is it worth investing in this.what I have to to become a crore pati, shall i continue investing in this plan or better to invest in some mutual funds.
Rahul Goel answers, ravi, hi. to become a crore pati 15 yrs from now, you should be investing about rs 60,000 pm in instruments which will yield you about 15% pa. luckily for you the ulip is only a small portion of the overall monies that need to be invested for the purpose. so maybe you can keep the ulip and invest incrementally elsewhere i.e. mutual funds, maybe some high yield debt, some gold, etc.
vinit asked, my tax laiblity is rs.10000/- so what planning i do for saving tax
Rahul Goel answers, vinit, hi. you are about to make the same mistake which most people make! they invest money "only" to save tax! what you should try to do is save tax and achieve more. so if you have a 10-yr goal out there, and have adequate risk appetite, then you should have a portfolio which has a significant amount of exposure to the stock markets. this rs 10,000 can be parked in tax saving funds, which are effectively equity funds. this will save you tax, as well as contribute to your long term plan.
gandhivikas23 asked, Should u go for SIP or purchase MFs in bulk. I have never really understoof importance of SIP. Please clarify
Rahul Goel answers, vikas, hi. if you are salaried and want to inevst regularly then SIP is the most convenient way for you. the advantage is that you save in a more disciplined manner... and then ofcourse because you are investing regulary, the cost of acquisition of the mutual fund units is averaged out i.e. the risk of mis-timing the market is diluted. but if you have a lumpsum to invest then you need to do a STP - systematic transfer plan. you can lear more about this on www.personalfn.com. but basically, if you do not want to risk mis-timing the market go in for SIP and STP. but if you can take near term risk, go in for lump sum investments.
gandhivikas23 asked, Should u go for SIP or purchase MFs in bulk. I have never really understoof importance of SIP. Please clarify
Rahul Goel answers, vikas, hi. if you are salaried and want to inevst regularly then SIP is the most convenient way for you. the advantage is that you save in a more disciplined manner... and then ofcourse because you are investing regulary, the cost of acquisition of the mutual fund units is averaged out i.e. the risk of mis-timing the market is diluted. but if you have a lumpsum to invest then you need to do a STP - systematic transfer plan. you can lear more about this on www.personalfn.com. but basically, if you do not want to risk mis-timing the market go in for SIP and STP. but if you can take near term risk, go in for lump sum investments.
sandeep asked, Dear rahul i am investing 70000rs per year in LIC.But now i find it is my mistake.Ple tell me what to do now.
Rahul Goel answers, sandeep, hi. there is little that you can do now. evaluate the cost of surendering your policies and then maybe your financial advisor can guide you. in all likelihood the surrender costs will be significant.
Malini asked, Rahul : I have been investing in SIP's for over 2 years now. I invest around 13K p.m., in Reliance Diversified, Vision, SBI, Franklin Flexi, HDFC Prudence & DSP Tiger, Sundaram BNP Paribas. Besides, I hv lumpsum in ICICI Pru (Real Estate) and AIG Equity. Most of these are Growth funds. Any advise whether I should change my portfolio. Besides, I have a UTIL ULIP which matures next year. Shd I purchase another ULIP from UTI or any suggestions?
Rahul Goel answers, malini, hi. first, do not take a ULIP. decide that only when you have taken a look at your entire portfolio/assets. now coming to your portfolio... you have mentioned some scheme names, and some amc names. the thematic/sector funds dominate your portfolio - reliance power, vision, dsp tiger, sundaram midcap (probably). then you have some moeny in fr flexi and hdfc prudence, both of which are very good schemes. the investment in icici real estate and aig equity is probably not required. ideally you should have most of your money in schems like fr flexi and hdfc equity - both predominantly large cap. some moeny can be invested in value funds like dsp equity and quantum long term equity (disclosure - personalfn is founded by the same person who has founded quantum amc). you may also want to have not more than 10% in a fund like sundaram midcap.
vicky asked, Markets are down now. Is it the right time to purchase MFs
Rahul Goel answers, vicky, hi. in case of mutual funds, in our view, you should invest regularly. yes, when markets fall to attractive levels, you should top up your investments. so, don't wait. start investing... choose the mode to suit your appetite for near term risk.
Amit asked, Hello Rahul, Could you please advise some gud Tax Saving Mutual funds keeping in mind that i have gud risk appetite.
Rahul Goel answers, amit, hi. funds like fr india tax and hdfc taxsaver can be considered for investment. however, i recommend that you do not invest monies only to save tax... achieve more with the same!
MF asked, Rahul, I am 29 yrs old & my take home sal is 8lacs p.a. I m planning a SIP of 20K p.m and looking forward to the right combination of Mutual funds. i have selected JM contra, DSP Merrill lynch TIGER, Relinace Diversified Power sector fund and Reliance growth fund. Pl let me know whether its the right combination and what would be my corpus say after 15 yrs.
Rahul Goel answers, hi. well, i do not think what you have chosen is the best portfolio in our view. in an earlier response i have indicated how a portfolio can be constructed. in case you want me to look at your portfolio, you can write in to rahul@personalfn.com
SV asked, I am investing from Aug.2007 via SIP in the following MF and my investment horizon will be 5-8 yrs initially. SBI Magnum Tax Gain 3000/-, Kotak Tax Saver 2000/-, Franklin India Prima Plus 1000/-, Reliance Vision 1000/-, Reliance Power Sector 1000/- and Tata Infra 1000/-. Kindly advice me about my selection of above MF and suggest me 2 good diversified MF to add in my portfolio. (My choice is SBI Contra and HDFC Growth) Thank You
Rahul Goel answers, sv, hi. amongs the diversified / flexicap funds,franklin flexicap and hdfc equity are our preferred choices. we recently wrote an article - diversified equity funds are dead. do read it. it is available on rediff and personalfn.com.
Vala asked, Hi Rahul, I have an ULIP policy (Jeevan Plus) from LIC which is 3 year old now. Do you suggest to continue with ULIP for next 10 years or exit from it and go for TERM cover. Please advice which would be a better option
Rahul Goel answers, vala, hi. term insurance is a must, whether or not you have a ULIP. so, get youself a term policy!
pratik asked, Currently I am earning 16000 per month. I would like to start investing my savings. Please suggest me some good invesment options.
Rahul Goel answers, pratik, hi. start by identifying the financial objectives and goals for yourself and then invest your monies in a manner that they help you achieve them. you will need a professional to guide you. in the meantime you can always read the free guides available on personalfn.com
rahul sina asked, hi sir, i have invested Rs.5000/- in hdfc tax saver and Rs.5000/- in hdfc equity via SIP for 5 to 7 years. I want to invest another 5000/- in 3 schemes. Please suggest which one to opt in largecap fund, midcap fund and one ELSS. I can save via SIP for 7 years. How much i can get if i do that ? Thnx a lot.
Rahul Goel answers, rahul, hi. consider schemes like fr flexicap (diversified/flexicap), sundaram midcap and fr india tax shield. but before putting in monies into these schemes, be sure you have the allocation right. and also, are you investing in line with a plan? do you have a defined goal?
sasi asked, Hi Rahul, what is procedure for calculating NAV. How that calculation help us to eveluate the fund returns.
Rahul Goel answers, sasi, hi. you can read about
this on personalfn or even rediff may have something. simply put, nav is the net assets of the fund divided by the number of units whicih have been issued.
AshwaniMittal asked, Rahul, I am 45 year old and take home 14 lac p.a . I am planning a SIP for 40000/-per month for my retirement and marriage of my daughter which is about 8 years away. can you suggest the mutual funds where I should invest.
Rahul Goel answers, ashwani, hi. it will be difficult for me to recommend to you the exact portfolio as for that i will need to understand your overall asset allocation. if you can send me your details i can havea look at it. having said that, since the goals are 8 yrs, away, you can have a predominant equity fund portfolio. but given that it may be possible to get debt yielding 9 - 10% at the year end, some monies can be parked there too.
sandman asked, Rahul: Follwoing is my MF portfolio: Relaince Growth: 20000 Reliance Vision: 20000 Reliance Diversified Power:15000 Reliance Equity Advantage:10000 Fidelity Equity:15000 Franklin India Prima Plus:15000 Franklin India High Growth Companies:10000 HDFC Equity:15000 HDFC Tax Saver:20000 SBI Magnum Global:15000 Sundaram Select Midcap:15000 ING Domestic Opportunities:15000 Birla sun Life Equity:7000 Kotak Opportunities:7000 DSP TIGEER: 7000 I got a bit carried away and invested in too many funds. Please comment on my fund selection and how can I prune my portfolio to a select few funds?
Rahul Goel answers, hi. indeed you have too many funds, and unfortunately a lot of them are sectoral/thematic. also the allocation is done in a manner which exposes you to greater risk in our view. a complete restructuring of your portfolio is necessary.
Arindam asked, Good Morning. Sir, I have LIC Policy of around 25 lakhs and hopefully I will have around 40 lakhs after 20 years. I am also trying to make a pocket of Rs. 10 lakhs through PPF for 15 years. I need 1 crore after retirement. So you please tell me how to make Rs. 50 lakhs in next 15 years. I am not an aggresive since I am salaried person.
Rahul Goel answers, arindam, hi. firstly the rs 1 cr today is not the same as rs 1 cr 15 yrs from now as money loses value. rs 1 cr now is equivalent to rs 2 cr 15 yrs from now. you need to therefore plan accordingly. assuming you will have rs 50 lacs from other sources, you will need to set aside about 46,000 pm to meet your goal; but if you do not adjust for inflation, then you need to set aside only rs 15,000 pm
kvrao asked, Can you suggest a MF which can give us assured maximum return within a reasonable time?
Rahul Goel answers, hi. only funds like fixed maturity plans, which are close ended debt funds can give some indication of the returns they will generate. this too will not be assured. if you are looking for assured returns, then post office may be the place.. or an FD at a credible company.
Ahuja asked, Hi Rahul, I am 33-years married, have a daughter, dependent parents, living in own house. I am in service and my CTC is 2.85 lacs/annum. My asset allocations is Rs.1,15,000/- in EPF, Rs.25,000/- in PPF, Rs.5000/- in FD (Taxsaver), have 2-LIC policies (endownment & term) total cover Rs.15,00,000/-, invested through SIP in DSP ML Tax Saver Rs.13,000/- and HDFC LT ADV Rs.13,000/-. Can you please confirm whether I am going right? As I can not take risk so decided to put 10-15% in market through MF route is that OK. Looking forward for your reply.
Rahul Goel answers, ahuja, hi. well, all you have in your portfolio are governement schemes, life insurance and tax saving funds/deposits. from a portfolio perspective there is very low risk... but then correspondingly the return too will be low. depending on what your financial goals are, you may need to rework the allocations.
Dongavy asked, Hi Rahul, I am planning to invest Rs 2 Lakhs in mutual funds and I am 28 years old and married and wouldnt need to touch that fund for 10 years. what are the funds you suggest will perform the best in this tenure? I ve short listed JM basics,ICICI Pru Infrastructure fund, DSP ML Short and mid cap and Reliance Growth and am also planning to take an insurance for a life time for a sum assurred of Rs 10 lakhs.Please suggest a fund for a SIP of Rs.5000. Thanks for your advice.
Rahul Goel answers, hi. if you were to come to personalfn for our views, and compare it with what you have planned, there would be nothing in common! i suggest you employ the services of an honest fiancial planner to guide you with your investments. in any case with respect to the funds you have selected, they are thematic/sectoral in nature. in our view, the risk return tradeoff in such funds does not work to the advantage of the investor over the long term.
alok asked, I WANT RO START MY INVESTMENTS FROM WHICH TYPE OF MKT SHOULD I START I MEAN FROM STOCK MKT .MUTUAL FUNDS OR
Rahul Goel answers, alok, hi. if you do not have either the time or the skill to research stocks, best is to opt for mutual funds. there too some effort will have to made as not all funds out there are investment worthy.
Nishant asked, Hello Sir, I am 24 yrs old and have a take home of 50kpm with no liabilities / debt. I invest in mutual funds and stocks regularly (upto 25kpm). Kindly let me know what I should do to be able to retire by the age of 35?
Rahul Goel answers, nishant, hi. for me to be able to guide you, i need to know what stndard of living you have, and what you want to plan for when you retire. without that info any solution will be meaningless.
arvind asked, how do i plan my financial? am paying 5 lacs pa to aviva ulip. and lic 3 lacs (for whole family) further have 15 lacs in equity giving approx 15% return
Rahul Goel answers, well, arvind, what you need to ask yourself is whether these investments are going to help you realise your goals. if they do, then great. prima facie, in a couple of years, your biggest "investment" will be an "insurance" policy.. isn't that odd?
varalakshmi asked, Hello,I invested my money in postoffice term deposits & banks.Recently invested in UTI Mutual fund.Then the agent told me to invest in mutual funds like morgan lic etc. where to invest?
Rahul Goel answers, hi. the advice is very interesting... morgan stanley has only one mutual fund scheme and that too has to be bought on the stock exchange. and lic is an insurer (unlikely he meant lic mutual fund). you need to ask your advisor some hard questions... seems like you are not getting honest advice.
pranav asked, Hello Rahul.. one month i save a lot and one more i hardly save, this has been my saving trend right from the beginning of my career.. How do i plan to save steadily?
Rahul Goel answers, pranav, hi. enter into an SIP to the extent of atleast 70% of your monthly surplus. this will atleat put a cieling when it comes to your arbitrary expenditure.
Kumar asked, Hi I am 30 Years old. My Per Annum income is between 10 Lakhs to 15 Lakhs. Current Asset structure is 15 Lakhs FD 18 Lakhs MF 1 Lakh Direct Equity 1 Lakh ULIPS (Premium I pay per Annum) 1 Lakh Traditional Insurance (Premium I pay per Annum) Please advice me what changes I need to do? are Am I doing fine
Rahul Goel answers, kumar, hi. why so much money in FDs... they are probably giving you about 5 - 6% post tax. prima facie your allocation needs to be looked into. also, which funds are you invested in? in recent years, the going has been good and most funds have done well. but this trend will not sustain. you need to be invested in the best managed funds for future performance.
PKAnokar asked, Hello Rahulji, I am a 60 yrs old retired person want to plan for investment of 10 lakhs plz guide. My current plan is 70% in FD & rest in Mutual funds is it correct
Rahul Goel answers, sir, if you are dependent on the income from your investments then deposits are the best option. even FMPs can be considered. since you have 30% of your monies in funds already, it seems you have sufficient exposure to the stock markets.
rudra asked, Hello,Yesterday i hv invested Rs40000/- in Reliance Diversified Powersector Fund-Growth plan.Hw is the future for that MF.
Rahul Goel answers, rudra, hi. well power funds have done very well. but we at personalfn recommend to our clients to avoid invsting in such funds. but if invest they must, then an exposure of a max of 10% of the portfolio is sensible in our view.
sushma asked, Hi! Rahul Nice meeting u again I would like to invest in Mutual fund though i dont have much knowledge abt . I can invest upto i lac per annum . Could u pls guide me for which i shld go. and for how long . TKS
Rahul Goel answers, sushma, hi. well, i will need to understand a lot more about your asset allocation, goals, etc etc before i recommend something. if you wish, you can send your contact details to info@personalfn.com and a personalfn consultant can be in touch with you.
sanb asked, I have my 30% investment in Infra based funds & its giving gud return , can I make fresh investment in this infra oriented funds
Rahul Goel answers, hi, our view is that you shoud not. infact, you should consider booking some profits!
rushabha asked, could u please tell me which is the best MF in market
Rahul Goel answers, hi. at personalfn we constantly remind investors that they should not put money in the best mutual fund. they should look out for the fund which is best suiteed to them. a fund which is rated the best in the market, may be good for you, but it may be bad for me. so before committing monies, be sure to understand the scheme well. do not go by past returns only. there is a lot more to building a mutual fund portfolio.
Rahul Goel says, Thank you all for participating in the discussion. In case you wish for the Personalfn Team to guide you on any financial planning or related matter, please write in to us at
info@personalfn.comChat with Rahul every week!
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