Budget is just round the corner and it's time we gave some serious thought to investments. Will mutual funds be the safest form of investments? Are you aware of the investment options they provide?
What are the other investment options that can accrue maximum profits? What are the crieria for evaluating a fund?
In an hour-long chat on
rediff.com on Wednesday, personal finance expert
Rahul Goel replied to many such readers' queries. Here is the transcript:
Rahul Goel says, Good afternoon! Welcome to the discussion on financial planning!
anand asked, i am very confuse on my investment can somebody help
Rahul Goel answers, at 2008-02-20 13:17:06anand, hi. what is it that you are confused about? if you are starting to invest then naturally there is a lot out there that you need to understand. i recommend that you work on two fronts - one, identify an honest financial planner to guide you. and two, start reading up on the various financial instruments available out there. these two steps would be a good start...
andy asked, where shouls i invest rs 1,00000
Rahul Goel answers, andy, hi. well, before i can tell you where to invest the money i need to a couple of things about you. why do you wish to invest? for how long can you remain inevsted? do you have appetite for risk? what is the kind of returns you expect? details of your other assets... only once we have this can we guide you on where to invest.
Pramod asked, Hi Rahul, is it a good time to buy tax-saving funds? I haven't yet invested enough to save tax this year?
Rahul Goel answers, pramod, hi. there is little time left for the financial year to end. so in that sense you cannot delay the investment for long. you can maybe invest half the money now, and the other half in a couple of weeks from now. that way you will minimise the risk of mis-timing the market.
Divya asked, i am 24 year old female working as a civil engineer, want to invest money in some useful plans, can you suggest me the company and type
Rahul Goel answers, divya, hi. we need to know a lot more about you before telling you where to invest your money! having said that, if you are investing for atleast a 3 - 5 yr horizon, and have appetite for risk, then you should have a considerable portion of your money in diversified equity funds. with respect to insurance, opt for term plans. do not invest in ulips till you have completely understood the cost structures...
Abhijeet asked, Dear Mr Goel, how would JM Basic fund rate in your opinion? I don't want you to criticise it, but if I were to buy it -- as was recommended by my friends -- would you say yes or no? Thanks.
Rahul Goel answers, abhijeet, hi. let me put it this way. personalfn recommends to its clients that they not invest any money in sectoral/thematic funds. in case clients are very aware of the risks involved and they still want exposure, then we recommend an allocation of a max of 10% to a mid cap fund.
Deepti asked, Hi I am regular invest in ELSS ,so should i do SIP in ELSS and make this as investment for 5-7 yrs period
Rahul Goel answers, deepti, hi. SIPs are a great way to accumulate wealth. if you are salaried, and need to contribute to ELSS every year, then SIPs is a great idea...
babu asked, which is the best opt childern investment
Rahul Goel answers, babu, hi. in our view, this is an ideal combination - term insurance for yourself, and aggressive investments for your child. the term insurance will take care of your family's needs in your absence.
raaniiji asked, hi sir, i need to accumulate 10laks after in 5yrs. so, what kind of plans and how much money per month or year i should invest and where should i do this?
Rahul Goel answers, hi. you will need to invest about rs 12,000 pm in instruments yielding you on average 15% pa. this kind of a return is possible from equity funds. but you need to select the funds well, and also, as you approach the 5 yr maturity, you need to de-risk your portfolio by moving money to lower risk instruments like deposits.
rrrrrrr asked, hi! I am 41 years old. I hv one son and daughter studying 5th n 10th std respectively. The below are my asset details 1.Flat- worth 40 lacs(No Due/EMI) 2.House- 90 lacs. Next month it would be demilished n reconstrut with budget of 40 lacs. planning to take home loan for which EMI would be 40,000 p.m and the same could be paid by rent out the house after constn. 3.Take home - 1 lac 4.Cash- 15 lac (portion might be used for initial house costn) 5.psot office deposit- 9 lacs 6.Mutual Fund- Rs.25,000 p.m thorugh SIP(Started since nov 2007) 7.Expected to get cash of 15~ to 20 lacs this quarter from my father as my share fm family. Considering all the above, please advise me where i can invest the above surplus cash to enable me to get safe n decent returns.
Rahul Goel answers, hi. the cash and the expected inflow from your family amount to rs 35 lacs appx. this is more or less in line with what you need to spend to recontruct your house. now here's a question... are you comfortable with a liability on your books? if you are not, you could spend the cash you have to construct the house... when the rental income flows in, you could invest that. the other alternative is that you invest the monies now, and then service the EMIs from the rental income. in case you decide you hold back the cash and take a loan, then you may not really benefit ... a safe return today is about 8% pa; but the loan may cost you the same or even more than that, even if you adjust for the tax benefit... the situation will change if you are willing to take "risk" by investing money in equity funds and hoping to earn say 15% pa over 5 - 10 yrs.
goel asked, whats ur opinion on new sectoral funds like infrastructure funds - would you recommend them to someone who already has good exposure to diversified funds ?
Rahul Goel answers, hi. we recommend that investors avoid investing in infrastructure funds. most of these funds are simply marketing gimmicks to mobilise more AUM for the AMC. if you are in a well managed diversified fund then your fund manager always has the option to inevst in infrastructure stocks if