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?
In an hour-long chat on
rediff.com on Friday,
mutual fund expert Rahul Goel replied to many such readers' queries. Here is the transcript:
Rahul Goel says, Good evening! Welcome to the discussion on financial planning! Let's start!
Fageria asked, Which MF is better for long term (15 years)
Rahul Goel answers, at 2008-02-08 15:57:34hi. if you are investing for a 15-yr tenure to begin with then its very important that you invest with the right asset manager i.e. the AMC and the fund management team. The other thing to keep in mind is that over such a long tenure diversified equity funds will perform better, from a risk adjusted perspective, as compared to sector/thematic funds. 15-yrs is a great time horizon for investing in equities. select your funds smartly, or get professional help, and start investing!
Kishore asked, As i beleave in safe and one time investemny i have invested in LIC market plus,is this better option or u suggest some else for long term growth?
Rahul Goel answers, kishore, hi. at Personalfn we believe that investors should not confuse insurance with inevstments. they should take term insurance and complement that with mutual funds. pl note that if your LIC ulip is invested in equity then you are taking some risk! your money may not be as safe as you think it is!
Rohan asked, Hi... I'm Rohan, 23 yrs old. I've started investing in shares. What should I do to build a sound portfolio...
Rahul Goel answers, rohan, hi. its great that you have started saving so early. since you are investing in stocks let me ask you this one question - do you have the necessary skills and resources to pick the best stocks out there? in the last few years, most stocks have done well... this has probably made many investors feel that investing in stocks is an easy thing to do. i recommend you tread carefully.
Santosh asked, Wht u say abt the market, few days back when sensex down till 17000 mark i have purchased nearly 5lacs MF
Rahul Goel answers, santosh, hi. at personalfn we have no view on the near term movements in the stock market. we do not spend time thinking about this. what we do focus on is whether valuations are expensive or cheap. and when they are cheap, re recommend to our clients to invest in recommended funds, but in line with the planned allocation. by the way, our clients were investing money the day the markets started to fall late last month.
ANANDA asked, HI RAHUL, HOW DOES GROWTH OPTION AND DIVIDEND OPTION DIFFER IN MUTUAL FUND. THANX AND REGARDS, A. ANANDA RAO.
Rahul Goel answers, ananda, hi. in growth option no dividends are declared i.e. your money compounds. in case of a dividend option, the fund pays out a portion of the capital as a divided. pl note that a dividend received from a mutual fund tantamounts to the same things as you redeeming some mutual fund units in many senses (the tax implications are different). its your own money, not additional profit as some investors seem to think so.
vikas_poonia asked, Hi Rahul Gud Evening.. I want to invest 10k rupees in a mutual fund for 3 years [not for tax saving].Can u please let me know where shuld i invest?Please let me know the name...
Rahul Goel answers, vikas, hi. before you invest money, ask yourself a few questions. why are you investing? do you have appetite for risk? what is your expectation of return? once you have clarity on these three, then it will be relatively easier to decide where to invest money. if you have appeite for risk, and are looking for about 15% returns pa, then equity funds would qualify as an investment. in this category we like funds like hdfc top 200 and franklin india flexicap.
SD asked, hi I'm 25 yr single. I want to build my MF portfolio. I started with HDFC n SBI ELSS(2k each per month). Now i wish to add a few more MF's. I have decided to add Reliance Vision(3K/month), JM Emerging Leader's(2k/month) and SBI MidCap(1k/month). Is my selection Right? Kindly Guide. If there are any other MF u can suggest. I'm able to invest for 80c
Rahul Goel answers, hi. i suggest that before investing any more money, you understand clearly what kind of a portfolio you wish to build. if you have a lot of sectotr/thematic funds in your portfolio, you are taking on a lot more risk, with the hope of earning higher returns. since you seem to be a relatively new investor, its best you start by investing in the well managed diversified equity funds which have good track records. in short, your selection does not appear to be best suited to you.
Prashanth asked, Hi, I'm Prashanth. I'm 27 yrs old. I am executive. I would know about the good investment opportunities which are risk free & which can fetch me good returns going forward. Pls advise.
Rahul Goel answers, hi. if you are looking for risk free investment opportunities then the return you should expect should be about 8%. if you want to earn more, then you need to take on risk. any reason you do not wish to take some risk atleast?!
kiran asked, Hi rahul, i am planning to invest 50,000/- in ELSS. Kindly suggest me which are the better option? I am thinking the DSP-ML tax saver and Deutsche Tax saver, is these funds are better? Please suggest me which are the better?
Rahul Goel answers, kiran, hi. in the tax planning fund category we prefer funds like franklin india taxshield. even dsp ml tax is on our recommended list, but with a lower priority if you will.
Sagar asked, Hi Rahul, Can you tell me how I need to plan my investments (in terms of percentages... like MF - 15%, Equities - 50%, Cash balance - 25% etc.), so that I can lead a decent life after my retirement at 50? Please take an example with an income of Rs.6 lakhs per year as net take home pay and Growth rate in the salary will be 15% per year. Consider the scenario of taking a home loan of Rs.25 lakhs too...?
Rahul Goel answers, sagar, hi. for me to be able to guide you, i need to know your present expenditure levels among various other things. also, i do not know what your present age is?! i recommend you download our retirement planning guide from www.personalfn.com. its free of any charge.
KK asked, What would you recommend for a young investor building up his portfolio. I mean in terms of ELSS, Diversified, MID cap, contra, balanced, debt funds. how many or of how much percentage. if you could provide some examples it would be helpful
Rahul Goel answers, hi. all you need to do is invest in well managed diversified equity funds like hdfc equity and franklin india flexicap. if you need to invest in tax funds then opt for schemes like franklin india tax shield.
Sriram asked, In this Global situation of recession and Meltdown, Do u advise to continue holding mutual fund and stock that I am holding ? Or, sell them and go into Bank FDs ? Also, what are you yourself doing with your finances, in view of recession ?
Rahul Goel answers, sriram, hi. this is something a lot of our clients ask us too. our view is that if you are investing for a goal which is still atleast 3-yrs away, stay invested. however if you have needs for the money in the short term, then its always best to de-risk.
Gajanand asked, I have invested in MF 4 months back, now all the MF's have the -12% return, shall hold these mutual fund's OR?
Rahul Goel answers, gajanand, hi. when you invested in the fund, what tenure did you have in mind?! if it was less than 2/3 yrs, then you made the wrong decision. but if you are going to be invested for a longer tenure, then do not worry! stay invested... the stock markets are by nature volatile. they may be more so in coming months/years. but be sure you are invested in schemes which are best suited for your profile and needs.
dfd asked, am planning to invest in the following MF ..please let me know your opinion in long term view 1) Standard Chartered Premier Equity Fund 2) DWS Investment opportunity 3) SBI commafund 4) Kotak Opportunities Fund 5) JM Emerging Leaders 6) Sundaram Select Focus 7) HDFC Growth Fund 8) Reliance Vision or regular savings all are with growth option.
Rahul Goel answers, well, if you were to come to personalfn and ask us for a portfolio which suited you best, none of these schemes would find a place in it... what more can i say?!
sen asked, Hi a very Good Afternoon..am 24 yrs old.. 20k is my take home.. My dad is working in public sector.. Am planning for a term insurance of 50 lakhs for me.. Is it a wise idea with my take home..
Rahul Goel answers, hi. even though it may seem more than you need in a couple of years, this will be apt for you. so lock in your premiums now... if you try and top up your term insurance later, the premiums will be a lot higher.
RAHULBOSE asked, IS IT THE RIGHT TIME TO INVEST AND WHAT DO YOU SUGGEST BANK FD'S, MUTUL FUNDS OR STOCKS
Rahul Goel answers, rahul, hi. a volatile market tends to throw up investment opportunties for the long term investor. whether you should invest in stocks or deposits, is a function of your needs, profile, risk appetite, return expectation etc. but if you have appetite for risk, and are looking at a 3/5 yr horizon, the well managed diversified