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?
Personal finance expert
Rahul Goel answered to many such readers' queries during an hour-long chat on Thursday. Here is the transcript:
Rahul Goel says, Good afternoon! Welcome to the discussion on financial planning! Let's start!
Noneysh asked, Hi Rahul ! you always advice to avoid sector funds. My question here is how can we identify sector funds among equity diversified funds? should we make a decision on basis of funds holdings or it means a concentrated portfolio in sector holdings? also tell what a plain vanilla diversified funds is? thanks in advance.
Rahul Goel answers, at 2007-11-22 12:58:45hi. rightly defined sector funds are those funds which invest their monies in stocks from a particular sector only. thematic funds, basically, as the name suggests, invest in line with a these... so the theme may be india will grow and there will be need for infrastructure... and therefore power, coal, roads, cement etc etc. so such funds are easy to identify. at times diversified funds take exceptionally high exposure to a sector that is "hot". even such funds at times may be avoided. a plain vaninally diversified fund is basically a diversified fund which invests across sectors and stocks and is well diversified in its holdings.
Noneysh asked, Does change in fund manager have an impact on fund performance? if its true.. can you give a few examples.
Rahul Goel answers, indeed, sometimes, a change in fund manager can have an impact. and that's why you should invest in funds that are managed by 'teams' of fund managers as against 'star' fund managers.
ramya asked, hi rahul,i would like to make an one time investment of Rs.10000 in MF. Kindly advice which would give best returns.
Rahul Goel answers, ramya, hi. for me to be able to guide you on the schemes you should be investing in i need to understand more about your needs and risk profile. having said that if you have appetite for risk, and an investment horizon for 3-yrs, consider funds like hdfc equity and fr india flexicap. either ways best would be to employ the servcies of an honest financial planner.
ravihirani asked, i want to du sip for 20 yrs which are the best fund available
Rahul Goel answers, ravi, hi. consider funds like hdfc equity and fr flexicap. also i suggest do an sip for 12 months to begin with. in the 11th month review your inevstments and then decide to renew the sip. renewals are not cumbersome.
Sarat asked, Hi Rahul, 1. I want ot invest 50k in MF for this year towards tax saving, can u suggest which MF's best in industry for that amount and how rate of return they will provide after 2 years. 2. Please let me explain what are the MF that provide tax exemption when they in the NFO state
Rahul Goel answers, sarat, hi. equity linked savings schemes or ELSS are mutual fund schemes which will offer you this tax benefit under sectin 80C. you can opt for schemes like fr india flexicap and hdfc taxsaver. with regards to the return, personalfn expects a well-managed diversified fund to return a return of 15% pa over a 3 - 5 yr period.
amitabh asked, hi rahul presently i am doing a job getting 30k per month from past 1 year.as i was repaying my education loan i had not saved much till now. I want to do mba after 1 year . As my loan is over please provide me help in how to manage money now onwards so that i can save money for future and also get tax benefits.as in ulip require investment for 3 years hence not of my use ...
Rahul Goel answers, amitabh, hi. if you wish to go in for your MBA next year, then will you need the money? if yes, then you should be investing only in fixed deposits and short term debt funds. if you can put the money away for the long term go in for mutual funds. also before going in for a ulip, go in for a term insurance plan.
parag asked, Hi, Please comment on agile funds , is it a good option .
Rahul Goel answers, parag, hi. our research note on the same has not been released. suffice it to say that at personalfn we find 99% of the NFOs do not make the cut in terms of being investment worthy.
moonmoon asked, Hi Rahul. Iam 43 yrs. Want to invent on MF to reap rich benefits after my retirement at say when I am 53 yrs. Pls. advice the best MFs now, best with SIPs which would give me high returs.
Rahul Goel answers, hi. since you are ten years from retirement, you can definitely consider building an aggressive portfolio. i am assuming you already have exposure to debt by PPF/EPF and the traditional insurance policies. invest in funds like hdfc equity or top 200... and you should expect to earn about 15% pa over this period.
cinki asked, Since last 4 months i hv started a monthly SIP of 4k each for FIDELITY EQUITY FUND GROWTH HDFC PRUDENCE FUND GROWTH OPT. DSP ML TIGER FUND GROWTH OPTION HDFC TOP 200 FUND - GROWTH OPT. SBI MAGNUM GLOBAL FUND - GROWTH ICICI SERVICES INDUSTRIES GROWTH RELIANCE GROWTH FUND - GROWTH PLAN PRU. ICICI EMERGING STAR FUND - GROWTH FRANKLIN INDIA OPPORTUNITIES FUND - GROWTH Do you agree with this selection or do you think i should relook at it. Also i am 30 now and would like to retire by 45 max by when i eaily would want to hv 2 cr. Do you think this plannign will help me. I do have investment in real estate market value is around 60lacs. Besides this what all should i do to achieve my goal. My annual take home is approx 25lacs.
Rahul Goel answers, hi. if you wish accumulate rs 2 cr in absolute value 15 yrs from now, you do not need to worry much. assuming your real estate investmetns have been planned well, they should return about 8% pa and that should more or less take care of your goal. however, if you were to accumulate rs 2 cr on an inflation adjusted basis, then you will need to set aside about rs 65,000 per month at 15% pa. with regards to your current holdings, you can definitely do without some of the schemes you own.
mike asked, Hello rahul, you recommend franklin flexicap (new fund) whereas I find franklin prima doing better and also has long track record. Please clarify your view for I am thinking to switch my sip from franklin bluechip.
Rahul Goel answers, mike, hi. franklin prima is a mid cap fund and hence it should not be a core holding in your portfolio. fr flexicap, a diversified fund, is about 2.5 yrs in existence but is managed by fund managers who have been in the same amc for over a dozen years. so, everything is the same except the scheme... in such instances there is no harm in overlooking the short history of the fund.
rambabu asked, I am presently investing in Franklin Prima Plus by SIP and investing in Reliance Diversified Power Sector on monthly basis. Besides I have invested in Canara Robeco Growth, Kotal Global Emerging Market Growth, JM Basic Growth, Sundaram Energy Growth. Is it right portfolio. Pl. advice.
Rahul Goel answers, rambabu, hi. you have more than a fair share of sector and thematic funds. in the recent past you may have done well, but over the long term this is a risky bet. remember what happened to tech funds? time to relook at your portfolio...
CHHANU asked, HOW TO PLAN & WHERE TO INVEST RS 10.0L
Rahul Goel answers, hi. well, if you are not an expert yourself, you should employ the servcies of one to help you with your planning. if you hve the right planner, then more than half the risk of going wrong is eliminated there and then!
manoj asked, Hi Rahul, Are 5 yrs FDs -Interest Tax free ?
Rahul Goel answers, manoj, hi. not all 5-yr fixed deposits are tax-free. certain designated schemes are tax free... ask your banker before putting in any money.
kichas asked, im a small investor, im planning for sip, of 1000 p.m, for 1 year , icici infrastructure growth or canara rebeco infrastructure, or any other, i look at some nominal 20-25% returns
Rahul Goel answers, hi, all i can say is that if this is what you are planning to do, then be sure that you are aware of the risk that you are taking on. maybe you will make a lot of money; but then there is the other side too... our view is that its best to be diversified.
Gautam asked, Hi Rahul, this gautam here. Firstly I would like to inroduce myself. I am a NRI and I would like to ask you about some one time investment for my child.
Rahul Goel answers, gautam, hi. well, if your child has more than 5-yrs before he will need the money, you should opt for a predominantly equity mutual fund portfolio. opt for 5/6 well diversified equity funds. avoid, sector/thematic funds. avoid ulips. but do take a term insurance for yourself.
john asked, Hi rahul, What is the basis for calculating adequate term insurance cover? How much should be the amount?
Rahul Goel answers, john, hi. there are many ways of doing this... at personalfn we have one of our own! you can visit the Calc section on personalfn and use the Human Life Value Calc to get a sense of the amount of insurace you should take on.
JKV asked, Sir, kindly advise about my portfolio, which I started in aug.07 SBI Magnum Tax Gain 3000 pm hdfc tax gain 2500 pm reliance Tax saver 2500 pm kotak tax saver 2000 pm franklin india prima plus 1000 pm tata infrastructure 1000 pm reliance power sector 1000 pm reliance vision 1000 pm thanks joginder verma
Rahul Goel answers, hi. notice you do not have any fund (other than tax saving) from well managed amcs like hdfc, fidelity or even dsp. but you do have more than a fair share of sector funds.... your distributor can defnitely guide you better!
manish baba asked, Hi, To achieve 50L in 2014 how much to invest
Rahul Goel answers, manish, hi. about rs 45,000 per month at 15% pa... however if you factor in inflation, this would increase to over 63,000 pm.
preetam asked, hi rahul,I am Preetam presently working as a software engineer in an MNC, from August 2007 I am investing @ Rs1000 pm (SIP) in SBI Magnum Contra Fund (G).I will be investing for next 3 years.How do you see the future of this fund in terms of growth of NAV.Also I am planning to invest in a Balaced fund.Which is the fund you will recommend I should go in for???
Rahul Goel answers, preetam, hi. a couple of things here. one, you need to be invested across 5/6 funds in a portfolio... one fund will not do! two, it is best that you adopt a portfolio approach before investing any more money... otherwise you will be consider one fund after the other and at the end you may have a portfolio that does not suit your purpose. to answer your question about balanaced funds... then hdfc prudence and dsp ml balanced can be considered.
prabhash asked, Hi Rahul, I'd taken a mutual fund (Rs 40000)in July 2007(UTI India Lifestyle Fund).Pls suggest had i taken the correct one?
Rahul Goel answers, prabhash, hi. this is a thematic fund... and in our view, you can definitely do better without it.
Kapil asked, Hi Rahul, I am 29