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