Want to be rich? Here are a few golden tips

Are you always at a loss while planning your finances?

Are you aware of the investment options available in the market?

How best can you plan your finances?

What are the crieria for evaluating an investment option?

Are mutual funds profitable investment options? When and how should one buy mutual funds?

In an hour-long chat on rediff.com, financial planning expert Sailesh Multani offered some valuable tips. Here is the transcript:

Sailesh says, Hi, good evening and welcome to this chat session

Gautam asked, How can one save thru PPF?
Sailesh answers, at 2010-12-23 15:58:23Hi, any resident Indian can invest a sum of Rs 70,000 into a PPF account in a financial year. The investment in PPF earns a return of 8% p.a. compounded annually. The interest on deposit is tax free. The investment in PPF qualifies for deduction under section 80C of the income tax act. A PPF account can be opened in the name of a minor also. The PPF account can be opened with a post office or any branch of a SBI.

damodharan asked, Hi Sailesh, Kindly share some good investment options....such as MF,ELSS,SIP,PPF Which will be gud option considering that we want short, mid & long term returns.
Sailesh answers, Hi, for short term i.e. less than a year you should only consider investing in bank Fd or short term income fund (dividend payout). For medium term i.e. 2-3 years, a combination of MIP and balance funds will be the ideal option. For the long term, say 5 years and more, you should look at equity funds. As far as equity funds are concerned, you should adopt the SIP route

srinivas asked, hai i want to enter in sharemarket/is it right time/if yes please suggest some long term shares
Sailesh answers, Hi, equity markets by their very nature are volatile. Not only one needs to invest in the right stock but also at the right price. This information is available to handful of professional fund managers. Therefore for beginners, my advice would be to invest via the mutual fund route. Pick up 3-4 well managed diversified equity funds and invest systematically. Once you are familiar with the risk associated with equity markets, you can go onto invest directly into the stocks.

sandeep_aich asked, I wish to invest in some good long term mutual fund scheme for a tenure of atleast 10 years time from now through monthly SIP @ 3000 rs....Hve done some research & funds which looks good are HDFC equity fund (G), ICICI Pru Discovery Fund (G), HDFC Top 200 fund......please suggest any out of these or if anything else you might have to suggest...thanks
Sailesh answers, Hi, all the funds listed by you are among the better performing ones. You can start the SIP without having any doubt in mind. I am sure if you remain discipline and patient for 10 years, you will surely build wealth for yourself. Please keep in mind to review your portfolio every six months to ensure that is growing efficiently.

Chirag asked, Is there a option of any kind such as Provident Fund. I would like to have a monthly fixed investment such as PF but not exactly with the PF dept. Thank you for assistance.
Sailesh answers, Hi, you can consider investing in Public Provident Fund (PPF) account. I mentioned about this fund at the start of the chat.

nksingh asked, i have dabbled in equities directly for 5 years now and the results have been mixed.i feel that i should have used the MF route for a more disciplined and sustained returns. Pls suggest...
Sailesh answers, Hi, as I have explained earlier, for lay investor, who does not have necessary skill and information to buy the right stock at the right price, the best way to invest in the equity market is through the equity funds. As an investor you need to build a portfolio of 4-5 well managed diversified equity funds. Invest in these funds for the long term, say 5 years and more. Invest via the SIP route. Review your portfolio regularly and watch your money grow

vasu asked, is investment in PPF is exempted from tax if basic salary < 8.2 lakhs /annum, is it additional
Sailesh answers, hi, PPF is additional deduction available under section 80C. Your employer's contribution to PF is exempt from tax

hehehe asked, Which is better Shares or Bonds?
Sailesh answers, hi, both are necessary in a portfolio. While bonds are safer investment instruments that can give regular returns, shares score high on risk and are suitable for risk taking invstor with a long term investment horizon. An ideal portfolio should have both bonds and shares.

sandeep_aich asked, how is Fidelity Tax Advantage Fund (G) for long term investment (10 years) through sip....as nav is less & portfolio looks good....though am not sure about the fund manager...
Sailesh answers, hi, this is among the most consistent performers in the ELSS category. Any investor who is planning to save tax should consider investing in this fund.

hiiii asked, if i have to invest with age 30 should i invest in real estate or any other investment plans?
Sailesh answers, hi, I personally feel that real estate as an asset class should be avoided at this point in time. In my view the builders have been able to hold on to the higher rates purely on the basis of working capital support being provided by the banks. I am not sure how long will this last. Real estate prices are in the bubble zone. When will the bubble burst is anayone's guess.

MP asked, I have invested in Mutual Funds (myself as well as on behalf of my kids). Should I continue the investment (STP, will end soon) (or) wait for a correction?
Sailesh answers, hi, to be a successful investor you need to be discipline and patient. Timing the market does not help. i would strongly advise you to continue with your SIP/STPs

dee asked, I would like to get 25 lakhs in 5 yrs through mutual funds by invesiting 10,000 a month. Is it possible or should i increase my contribution. Pls suggest some good funds
Sailesh answers, hi, assuming that your money grows @ 10% p.a. you will need invest Rs 32,000 per month to reach the target of Rs 25 lakhs in 5 years. If your money grows @12% then the SIP amount can be reduced to Rs 30,000 per month.

kumar asked, I want to buy every month one Infosys,RIL & Herohonda shares for 5yrs instead of going for MF. Please advice whether my idea will suffice my needs.
Sailesh answers, hi, this is similar to SIP. I can only say that look into the future prospects of these companies and take a call. This iss certainly a good way of builing a portfolio of bluechip companies.

Pandit asked, I have started 4 SIP's one year before for 12 months.Now whether I have to redeem that or saty invested? SIP's were in Reliance Growth,Birla Sunlife Frontline Equity,UTI Dividend yield,Principal Emerging Blue chip fund.
Sailesh answers, hi, not a very impressive portfolio. Except for Birla Frontline, you should stop the SIP in all the others.

vk asked, dear sir i am earning about 0ne lakh per month and 41yr old. My bank loan for hba is Rs40 lakh. How much should i insure and from which one.
Sailesh answers, hi, to cover the home loan you need to take a term plan. This is the most ideal form of insurance. It will ensure that you have a larger cover for smaller premium. the tenure of the policy should match the tenure of your home loan.

subbu asked, How reliable are Gold ETF funds for good returns?
Sailesh answers, hi, Gold ETF invest in Gold. therfore the returns of these funds is directly linked to the performance of gold as a commodity. If you want to invest in gold then Gold etf is preferable. I would not recommend buying physical gold.

alapati asked, hai canyou suggest some good equityfunds
Sailesh answers, hi, my personal favourites in the equity fund category include - HDFC Top 200, fidelity Equity fund and DSP BR Equity Fund.

asdf asked, Hi, I am 21 yrs old, what is the best investment opportunity for me considering that i can invest around 3000-4000/month ?
Sailesh answers, hi, you are lucky to have realised the importance of investment at an ealry age. To ensure that you meet your long term goals like retirement,etc with ease and without much of risk, you need to start investing in equity funds via the SIP route. follow this discipline over the long term and I am sure you will be rewarded.

snpatelm asked, Almost 70% of my savings in my 10year working life is invested in equity at present as i bought some shares of my caompany as ESOPS. Shall i hold it or sell. I am getting 100% returns if i sell them today
Sailesh answers, hi, if 70% of your portfolio is only ESOPs then it makes sense to liquidate few of them and diversify your portfolio. 100% return is a good return by any yardstick.

yogender asked, Sir,plz clarify whether tax exemption can be taken if i am having bank loan and give rent reciepts also
Sailesh answers, hi, yes you can claim tax exemption while paying your rent.

saptarshi chatterjee asked, i want to start investing in MF. I have sorted out HDFC TOP 200; HDFC equity fund - growth; Franklin pharma fund; Reliance banking fund. I wanted to invest via SIP. what amount you suggest to invest each month against each of these MFs? should i start with all of them or start with one and then add up in future?
Sailesh answers, hi,

to being with I wouldnt recommend any sector fund unless you are sure of the sector doing well in the years to come. Stick to diversified equity funds. Add funds like DSP BR Equity and Fidelity Equity to your portfolio.

anand asked, i have a 6 month old son . for his education which mutual fund should i choose? i am earning 65000 per month
Sailesh answers, hi, you can invest in any well managed diverisifed equity fund. I have given the names of my favourite funds earleir in this chat. Start SIP in those funds and continue till the goal is reached. Pls do not forget to review your portfolio from time to time.

karthick asked, Please suggest a best way scheme for 1 year investment span.
Sailesh answers, hi, in the current scenario the best invetment for one year is bank FD. The rates have shot up by 1-2%. If you are willing to take some risk then you can invest in short term income funds also. You can expect one year return from these funds in the range of 9-9.50%

fda asked, Dear Sir, I am investing in 2000 each in HDFC top 200, Reliance growth and Reliance RSF fund through SIP. Pl suggest one of ICICI pru. discovery fund or IDFC premier equity fund. Thanks in advance
Sailesh answers, hi, between the two I would opt for ICICI PRU Discovery Fund.

Prash asked, how can u save more tax when you have already exhausted the 80C and housing interest limit
Sailesh answers, hi, you can claim small deduction under secton 80D towards the premium on medical insurance for you and your parents. you can also claim deduction for donation given to any approved charitable orgainsation under section 80G. Beyond these you will have to pay the tax!

MaheshPai asked, Is it wise to invest in ELSS? Because according to DTC, no tax benefit will be available on investment in ELSS. So it may loose its sheen.
Sailesh answers, hi, for the next one yoear at least you can invest in ELSS.

amaresh asked, Iam 51 yrs. Iam investing through SIP 1) HDFC top 200 Rs. 5000/month, DSP black rock 100 Rs.5000/m, Hdfc prudence Rs. 10000/- month . Alao i invest Rs. 22000/ through VPF. Also Iput rs. 70000/ per yr for me & my wife (total 140000/-) in PPF . This are all for my Retirement corpus purpose. I would like to have aretirement corpus of rs. 1Cr. in 7years. Plase let me know whether is it Possible?
Sailesh answers, hi, I would like you to post this question to my email : sailesh.multani@gmail.com. I will have to work out if your can build the necessary corpus.

Kumaraguru asked, I haven't thought about investment options till now. Holding my money only in Savings & FD. What is your advice for investment?
Sailesh answers, hi, it is certainly not a good idea to hold your investment in safer instruments like savings account and bank Fds. In that case you will have to settle for mediocore returns in the range of 7-8% p.a. If you want to grow your money you need to take some risk and this means diversifying your portfolio further by investing in equity funds. Also, allocate 10% of your portfolio to gold. Invest in gold through the Gold ETF.

ccc asked, I want o invest in my wife's name, and I want to get tax benefits for me, then what are all the different investment options available?
Sailesh answers, hi, you can invest in the PPF account in your wife's name and still claim deduction under section 80C.

Rani asked, Hello Sailesh, My friend told me that investing MF above rs.50,000/- in same plan will cause me to pay more tax. if wrong correct me.
Sailesh answers, hi, your information is not correct. There is no tax liability on investing in mutual funds. Only if you make any capital gains will you be liable to pay tax on them.

bab asked, Dear Sir, Good Afternoon...... Kindly tell me about my portfolio.I am investing in mutual funds from past one year through SIP Mode in GROWTH OPTION. Rs. 2000/- each in BIRLA SUN LIFE FRONTLINE EQUITY FUND - PLAN A , HDFC PRUDENCE FUND,DSP BLACKROCK TOP 100 EQUITY FUND,IDFC PREMIER EQUITY FUND-PLAN A,HDFC TOP 200 FUND , DSP BLACKROCK BALANCED FUND & Rs. 1500/- in RELIANCE REGULAR SAVINGS FUND-EQUITY PLAN.
Sailesh answers, hi, all good funds. Continue your SIPs.

muthu asked, Hi , i am 27 yrs old, after my retirement i need a regular income of atleast 10,000 per month, which will be the best for investment and yearly how much i need to invest...
Sailesh answers, hi, retirement corpus calculation takes time. Therefore, I would request you and all other participants who have similar queires to post them to me at : sailesh.multani@gmail.com

Sonal asked, Hello Sir, I am 30, earning 30k, i wish to retire by 40 and wanna save 2 CR corpus, how much i need to save pm and where to Invest ? pls Guide. Presently investing in MF 8000/- in Hdfc top 200 and Dsp Black rock top 100, 4000 each in SIP.
Sailesh answers, hi, assuming a return of 12% p.a. on your investments, to reach the target of Rs 2 crores in 10 years, you will have to invest a sum of Rs 86,000 (approx) per month.

dipankar asked, i have a lumpsum amount to invest for two to three months.which will be the best sector for me?
Sailesh answers, hi, if your indication is towards investment in equity market, then drop the idea. I would strngly recommend that you consider investment in a liquid funds. I believe capital protection should be your top priority. dont try to make your money work so hard for you that it collapes.

Ansh asked, Hi sir, can u pls suggest.I am 42 yr old having amt of 10 lakh.need to invest in secure return.Pls suggest.annual income is 50 k.ur response will surely appriciated.
Sailesh answers, hi, you can consider investing in HDFC Fixed Deposits. It is currently paying interest @8.80% p.a. for 22 and 33 months.

srdubey asked, Sir, what will happen to ELSS scheme after 2012?
Sailesh answers, hi, as per the DTC, ELSS will cease to exit from 2012.

Rinkesh asked, Hi Shailesh, I have been regularly investing oer 1 lac every year in insurances and mutual funds but the returns are not upto my satisfation. In one of my insurance instrument, the fund value still remains the same what I have deposited in last four years. I was suggested to change funds, but I am not aware of how to switch funds. Can you please advise how to make wise decisions for switching funds or is there any services available to manage it on my account?
Sailesh answers, hi, as far as your insurance is concerned, you seemed to have take a ULIP. Even in ULIPs you seem to have taken the debt option. that is why your money has not grown. I would request you if you can email me your portfolio.

santhoshpallavour asked, I have opted Birla Sunlife Child Plan & Bharti AXA Bright Star for my sons, and paying Rs.1300 & 1500/- monthly, please suggest me whether I have taken correct decision or I could have gone one MF via SIP
Sailesh answers, hi, you have taken insurance plans to build your children's education and marriage fund. This is not the right approach to meet your future goals. The right approach is to start SIPs in equity funds. Equity funds can work harder for you.

np asked, Sir, at an optimum level what is the corpus one should aim being an average middleclass, to retire at 58years. i am 38 now.
Sailesh answers, hi, based on my knowledge and experience of dealing with clients of the profile mentioned by you, I would say that any investor looking at build a retirment corpus till 90 years of his age, needs to keep a target of Rs 5 crore and above.

Mahan asked, Hi...I have my own house and planing to invest in one more property, EMI I can pay 40K/Month. Can I go for property investment or invest in MF of 40K every month (SIP). which is better? Please help.
Sailesh answers, hi, in my view SIPs of Rs 40k per month would be more preferable at this stage.

harish asked, Sir, Is investment in 80CCF bonds really worth compared to inflation
Sailesh answers, hi, given the tax benefit and interest rates offered by IDFC and L&T, they will manage to beat inflation by a small margin.

PRS asked, What is Gold ETF and what is the procedure to invest in Gold ETF
Sailesh answers, hi, gold ETF are Exchange Traded Funds. these funds invest directly into gold. To invest in these funds you need to have a share trading account with a stock borker. A demat account is also a must. Buying and selling of gold ETF is similar to buying and selling of shares.

HDB asked, How much corpus is adviceable to have for contingency/emergency ? Except for Bank FD, what options are available for parking contingency fund ? It needs to have immediate liquidity without principal erosion.
Sailesh answers, hi, ideally you should have 6 months household expenditure plus annual fixed cost like EMIs, premiums on life and medical insurance as a part of your contingnecy fund. Apart from FD, you can invest the money in short term income funds and liquid funds. These funds can be reddemed within 24 hours. chances of capital erosion are minimum in the case of these funds.

srdubey asked, good ULIP for 15-20 yrs
Sailesh answers, hi, I would like to advise all investors that they should not opt for any ULIP in any shape or form. ULIPs are neither investment nor insurance. These plan charge very high administrative cost in the initial years. these charges of course are deducted from the premiums. A large part of this cost is towards the hefty commission paid to the agents. so please stay away from ULIPs

Sailesh says, We have run completely out of time. I thank you all for participating in this chat session. If you have any questions which were not answered during the chat, you can mail them to me at: sailesh.multani@gmail.com.

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