Do terms like tax planning and investment baffle you?
Do you always struggle to find the best investment option? Do you think you hardly can save anything as your surplus income is eaten up by the taxes you pay?
In an hour-long chat on
rediff.com on Thursday,
Rahul Goel, CEO, Personalfn.com, answered many such readers' queries.
Here is the transcript:
aditya asked, hi,pl.tell me SIPs with 8-10 years horizon.i can invest about 20000 p.m. in SIPs
Rahul Goel answers, at 2007-07-05 12:55:33aditya, hi. sips are not an investment destination. they are a means of investing in an asset like equity shares. given the time horizon, it is likely that equity funds will suit you best. but, your risk appetite will need to be factored in here. the other point to keep in mind is that while selecting funds, you need to be very careful. do not go in for the 'flavour' of the month. opt for process driven funds which will deliver over a stock market cycle. aim to invest in 4 - 5 schemes at most. again, your financial planner should be able to guide you on this.
tur asked, what is the period to evaluate MF performance - 6 month, 1 yr, 3 yr or 5yr ? many of the funds (like HDFC equity) which delivered on a 5 year horizon, did not offer good returns in the last 1 year ?
Rahul Goel answers, very good question. when evaluating a fund ilke hdfc equity, one needs to not only look at the past performance but also the way in which it is managed. its a fund which is managed by a very exprienced fund management team led by prashant jain. it has been a very good performer over longer periods; last year has been poor. but, that's ok. a fund cannot do well all the time; it should do well over a period of time. most importantly you need to evaluate how a fund performs in a declining market. you will find that hdfc equity scored very high here. so, in short, returns is only one part of evaluating the fund.
anuj asked, Hi Rahul, I am working in software field currently my annual income is 5.5lacs and i get 35k in hand on monthly bases after all the deduction. I have a total savings of 2.0lakh in stocks and MF plus 1Lakh in PPF. Currently i am going to get married at end of this year, plus i need to buy a house so what according to u shld be the best thing for me to do. Since i have to finance my own wedding as well as to buy a house in Mumbai. Please advice
Rahul Goel answers, anuj, hi. you are dealing with several objectives, like most people. you will need to prioritise your needs. since marriage is already scheduled you will need to set aside money for that; then buying a house becomes important - a home loan can help here (its also tax efficient). effectively your incremental savings will get deferred for a while. once you are married and settled down, you must try and make up for this slack savings period.
divya asked, Dear Sanjiv, my monthly cash in hand is almost Rs 1,20,000. Out of which EMIs (HL+PL+Car Loan) is Rs 52,000. I have a housing loan of Rs 30 lakhs which I took 2 years back, car loan of Rs 2,50,000, Personal loan of Rs 4,50,000. Cash in hand is almost Rs 6.5 lakhs. I have started saving almost Rs 40-50,000pm. Please suggest how do I plan my finances. My son is 8 year and daughter is 1 year. I have taken life time policy for my husband where I pay Rs 1 lakh every year(2 lac now), Smart kid policy for my son, where I pay Rs 5,000 every month(40K now). Planning to start the same for my daughter also. Where should I invest to secure my kids education, their marriage and our old age.
Rahul Goel answers, divya, hi. before getting into financial planning for your children, you should ask yourself that if you have money, then why have you got a personal loan. depending on how you look at debt, it is best to get rid of unnecessary debt as soon as possible. also, in our view, the best way to save for children is to make pure investments - in the stock markets, real estate, bonds etc. insurance is good, but very expensive. and therefore it cannot be the core savings product for your children. it should be one of several. talk to your financial planner; if you do not have one, find out someone who is honest.
SIVASHANKAR asked, Sir, I want to start SIP in Equity Fund and ELSS also? Which fund would be the best? Please advise.
Rahul Goel answers, hi. you will first need to answer why you are investig in the first place. without that input it is difficult to suggest where your monies should go. with regards to elss, there are different types of schemes out there - some are aggressive, and some convervative. you should select the scheme which matches your profile. again, remember tax planning is a subset of overall financial planning. you should invest in such a way that you save tax and also meet your long term goals and objective. that would be smart investing!
s.k. garg asked, how i should plan to invest my money in mutual fund, Insurance and equity for higher return on investment as good as tax benefits.
Rahul Goel answers, the best way is to get yourself an honest financial planner. discuss with him your objectives and draw up the plan to meet them. there are no short cuts!
Goyal asked, Hi Rahul, My question is regarding savings. How much of take home pay should one target to save/invest. Please tell me reasonable target %.
Rahul Goel answers, hi. save as much as you can. in early stages some people save as much as 50% of salary. remember, every rupee you save today, is worth more than a rupee you save tomorrow. the earlier you start putting money aside, the better it will be for you from a future perspective.
ksp asked, What is the average impact cost of mutual funds that operate in India
Rahul Goel answers, equity funds usually charge an entry load of 2.25%; some funds don't charge any load. other than they there is an annual expense ratio... which can be as high as 2.5% per year; some funds charge as low as 1.7%. these charges are significant but a small price to pay for professional money management. of course, if the money manager does not deliver, then these charges hurt!
kaul asked, i am 34 ,monthly income is 50 k,i invest 12 k on MF,and rest in insurance and ULIP etc,kindly give me some plan so to manage and invest better
Rahul Goel answers, since i am not aware of the objective you have when inevsting the money i am not able to give you concrete advice. however, don't forget insurance can be an expensive way to save money. when making fresh investments factor the costs in.
Vijay asked, Right now my earnings is 26K per month. I can save 10K per month after all expenditure. Is Mutual fund a good bet to invest in? Which is the best one to invest? If I plan to invest with 5k per month how much can i expect back after 3 years?
Rahul Goel answers, mutual funds today offer enough choice; therefore it is likely that they can be the preferred way to invest for most individuals. there are a lot of funds out there... a few of which we believe are good enough to invest money in. you will need to select the funds which suit you best - from the perspective of the asset class they invest in and the risk they take on and even the style of investing monies.
ghh asked, My annual income is about Rs 6 lakhs. What should be the best form of tax saving investment for me?
Rahul Goel answers, the most common mistake people make is that they invest money only to sve tax. we recommend that one should invest money in a manner that he is able to not only save tax but also take care of future needs (like retirement, child educstion etc). if your needs are far out, opt for elss. if your needs are near term, you will have to consider deposits that quaify for tax benefits.
kamal asked, right now am 26, after 50 i need to be free from finanial constraints. What are the best method to invest my money? earnings around 45K per month
Rahul Goel answers, kamal, hi. you have 24 years before you want financial freedon. that is a reasonable time frame. assuming that you have an appetite for taking near term risk, exposure to risk assets like equity / equity funds would be a preferred way to realise your goals. some of the money can be allocated to other assets like gold (not jewellery) and maybe real estate (via real estate funds - as and when they are available).
prasad asked, hi, i want to invest 75k in lump sum for a period of 5 years, which scheme is good?
Rahul Goel answers, prasad, hi. the important thing to know is whether or not you have an appetite for risk. if you do, you can include equity in your portfolio. if not, then this may be a good time to lock in some money in FMPs (a type of a debt fund).
Vikas asked, Dear Sir, I have holding following mutual funds(SIP). Please suggest whether my portfolio is good or not? - HDFC Tax Saver : Rs .1000/- p.m. - HDFC Equity : Rs. 2000/- p.m. - Reliance Growth: Rs. 2000/- p.m. - SBI Magnum Contra: Rs. 2000/- p.m. - SBI Magnum Tax Gain : Rs. 1000/- p.m. Please suggest whether should I change any of the above funds? I want to include two more funds(SIP) in my portfolio of Rs. 1500/- each. Please suggest which funds should I include? Regards Vikas
Rahul Goel answers, vikas, hi. i think to start