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 on Thursday, financial planning expert Sailesh Multani offered some valuable tips. Here is the transcript:
Sailesh says, Hi, good evening and welcome to this chat session
DW asked, It is correct time for booking profits from MF and wait to reinvest on correction or there is still uptrend left for nifty around 63 - 64
Sailesh answers, at 2010-10-07 15:59:20Hi, there is no correct time for booking your profits. You should book your profits when your actual return has exceeded the target return or when you need to re-balance your asset allocation. Don't wait for a SENSEX or NIFTY level to book your profits. Please remember that nobody has been able to time the market. If you have made profits, it is time to book them or else you will only have regrets later.
Viranch asked, Is SIP a good tool of MF investments. While selecting MF, what criteria should be kept in mind?
Sailesh answers, Hi, SIP is definitely the most preferred way of investing in equity funds. It does away with the bother of timing the markets. It also encourages investors to invest across the market cycle thereby bringing down the average cost of purchase. While selecting a mutual fund you need to look at various qualitative and quantitative factors the fund manager and his team, the source of research, past performance, expense ratios, risk-ratios. If you find it difficult to research mutual funds then you should engage the services of a competent investor who will help you choose the right funds based on your investment objective, risk appetite and investment horizon.
astha asked, Hi, I want to invest 15k to 20k to get the maximum return over 5 Years. Please suggest
Sailesh answers, If you are willing to take risk, then the ideal investment for a time horizon of 5 years and more is equity. You should consider investing in diversified equity funds and invest via the SIP route. Please keep in mind that it is always prudent to have a balanced portfolio consisting of equity, debt and gold. Here I have assumed that you have already invested in debt and gold.
astha asked, hi , I always go for FD , however now days interest is very low. Kindly suggest alternative which is Safe and will give good interest. Thanks in Advance.
Sailesh answers, Hi, if you want assured returns with safety then bank FDs are the ideal choice. You can even consider investing in small savings schemes like PPF, NSC, KVP and Post Office Monthly Income Scheme (POMIS). The rate of interest offered by these schemes is 8% which is a little higher than the FD rates offered by most commercial banks.
suryanarayana asked, i can invest 2000 rs per month can u suggest me the best one.i can take the risk
Sailesh answers, Hi, start with SIP of Rs 1000 each in HDFC Equity Fund and Fidelity Equity Fund
SOURABH asked, WHAT IS SIP ?
Sailesh answers, hi, SIP stands for Systematic Investment Plan. Under this plan an investor can choose to invest a fixed sum of money into a mutual fund scheme on a specified date. SIP is considered to be the most prefered way of investing in equity funds. It does away with the challennge of timing the markets and encourages investors to invest across the market cycle.
darren asked, which is the best life insurance company and which plan? please suggest...
Sailesh answers, hi, if your need is to cover the risk of dying at an early age, then the Term plans are the best. In fact when it comes to insurance I follow the adage - Think Insurance, Think Term Plan. Term plans offer higher sum asurd for a relatively lower premium. Dont fall for ULIPs or anyther form of insurance.
venkatesh asked, I have SIP in the following funds HDFC growth, HDFC equity, DSPBL top100, Reliance equity all in growth option. I like to invest in another 2 funds. Pls suggest
Sailesh answers, hi, consider investing in Franklin India Bluechip Fund and Fidelity Equity Fund
ram4u asked, i have SIP in HDFC tax saver ,HDFC growth ,HDFC Mid cap,Reliance Equity opportunity MFs will these make my portfolio better after 5years or do i switch on some other fund ?
Sailesh answers, hi, you are healvily invested in mdcap funds. I am sorrt these are not the ideal funds for your long term portfolio. Consider adding large cap funds like HDFC Top 200 and Fidelity Equity Fund to your portfolio.
service asked, dear sailesh, I want to invest in index funds on an sip basis.can you give your views on a few with low tracking and performance .
Sailesh answers, look at funds from HDFC and Franklin Templeton
RK12 asked, Hello Sailesh, I have invested 20K in SBI Tax Gain, 20K in Principal Tax Saver Fund, Investing 4K via SIP in HDFC Equity Fund for 3 years, Investing 6K via SIP in HDFC Prudence Fund for 5 years & 39K in ICICI Infrastructure FUnd (already invested via SIP). Can I sell ICICI Infrastructure Fund as I am getting 23% for an year ? How is my portfolio looks like ? Any other funds to include ?
Sailesh answers, hi, overall a good portfolio. Its a good idea to get out of infrastructure fund and switch to a diversified fund like ICICI PRU Dynamic Plan. Also remember you need to review your portfolio every six months to ensure that the funds you are invested in are performing as per your expectation.
kshitij asked, I'm 27 yrs old and single. I've surrendered some of my LIC policies becoz of poor performance(instead took a Tata AIG term policy) and now looking for better investment options.As market is now at it's peak,NAVs for most of the good MFs are already at their highest, which are the better funds to invest this time then? Shall I wait for market to correct? Is it worth to invest in IDFC infra bond? I'm not looking for tax benefits as I've already got a home loan, which covers my tax bracket.
Sailesh answers, hi, congratulations on taking the bold step of surrendeing your non-performing insurance plans and taking a term plan instead. I would not encourage you to time the market. Therefore, invest in equity funds via the SIP route. Dont worry about the correction - it will come for sure but when nobody can say. Therefore start your SIP. Invest in 4-5 funds and invest your SIP across the month. IDFC Infrastructure Bond is not an attractive investment proposition. It offers interest that will match the 10-yr yield of Government Bond which is currently 7.90%. Assuming an investor gets 8% every year on investment of Rs 20000, he will get total interest of Rs 16,000 plus a maximum tax benefit of Rs 6000. That is total maturity value will be Rs 42000. The average return pre-tax comes to not more than 7.70%. This is far less than the one year return offered by bank FD currently. My recommendation is no for IDFC Infrastructure Bond
ram040479 asked, Hi I have around 1.5 lacs in term deposits, 60K in Mutual funds just put recently. Apart from the above I have 50K in cash waiting to be invested somewhere. But I donno where? can you help me out in this.
Sailesh answers, Hi, you havent mentioned your age and investment objective. Therefore difficult to give you a precise answer to your question. It appears that you have not invested in gold so far. YOu can allocate 15% of your portfolio to gold. Invest in Gold ETF, dont buy physical gold. The balance can be invested between FD and equity funds.
aa asked, HI, I have invested in HDFC top200,franklin blue chip, BR small and midcap fund, Reliance regular savings and Fidelity Equity fund all growth options. Can you tell me how is my portfolio?
Sailesh answers, hi, very god portfolio. Keep on reviewing your portfolio from time to time to ensure that it grows efficiently.
Dia asked, I am 29, and downthe line 20 years by 49 i need a corpus of 2.5CR, and want to invest thru monthly SIP in MF, suggest monthly how much to invest and in which fund ?
Sailesh answers, hi, assuming your investments gorw @ 10% p.a., you need to invest a sum of Rs 32,500 per month to reach the target of Rs 2.50 crores in the next 20 years.
prknimesh asked, Sir, please give some details on how Gold bonds work, what are Gold bonds. I have heard of these but don't know, people say its similar to like buying Gold, but instead of actual Gold, we get a bond of that worth. Please give details
Sailesh answers, hi, according to me investment in gold should be done through Gold Exchange Traded Fund (ETF). Every unit of Gold ETF is backed by half or one gram of physical gold. The units of Gold ETF are held in demat form. Hence, there is no botheration about safekeeping of gold that is associated with physical form. Also, the gold held by Gold EFTs are backed by physical gold of 0.995 fineness which is secured and insured. Gold ETF score on the wealth tax front too; they are not considered as wealth for Wealth Tax purpose. Physical gold is considered as wealth for wealth tax purpose. Also, Gold ETFs are treated as long term capital assets if held for more than 12 months from the date of purchase. One can avail of the indexation benefits claim concession from long term capital gains tax, if any. Don't rush into buy gold. Invest a small a sum every month. Spread your investments over the next 6-12 months.
sddssss asked, Dear Sir I have invested in MF 2000 p.m in HDFC top 200,1000 in DSPBR top 100, & 1000 in Reliance growth per p.m for 5 year my age is 40 years & i am invested Rs 60000/- P.A. in Lic pls tell us that my portfolia is right or not pls pls suggest i am very thankful to you.
Sailesh answers, hi, overall a good portfolio. Consider adding large cap biased funds like Franklin India Bluechip fund and Fidelity Equity Fund.
bABAA asked, INVESTING IN INFRASTRUCTURE FUND IS GOOD?
Sailesh answers, hi, infrastructure funds are thematic funds. When the infrastrcuture related sectors do well these funds tend to outperform all other diversified equity funds. But the reverse also holds true these funds. When the infrastructure theme goes out of flavour, these funds are the most hardest hit. My advice to investors - stay away from thematic and sectoral funds. Invest only in diversified equity funds.
prash asked, Dear Sailesh, Now market is uping up, Is this right time to invest in MF or wait for correction. Is this time is right for which type of investment Gold / Property / Shares?
Sailesh answers, hi, with markets reaching new highs every day it makets it dificult for investors to plan their investment. The only strategy that one can put into practice is to stagger your investments. Break your investmen surplus into 4 equal parts and invest 1/4th immediately. Wait for a week and invest the otehr 1/4th. Quite possible that during the course of the month you may get opportunity to invest at the lower levels. but dont wait for long. If you are a long term investor, 5-10% correction doesnt matter a lot.
Anuradha asked, Can you please suggest me a good gold ETF Fund for investment through SIP. Thanks.
Sailesh answers, hi, I recommend Benchmark gold ETF to investors.
kmb asked, hi, how do u see the real estate sector over the next 2-3 years?
Sailesh answers, hi, this is one sector that I would like to keep myself away from. The way property prices have been moving is baffling. I am told that there arent much transactions happening. The builders are artificially holding the property prices. I personally believe that property market is in a bubble zone and investors should keep away from the same.
Jayanta asked, How will you rate DSP blackRock Micro Cap Fund - Regular Plan (Growth)?
Sailesh answers, hi, its a good funds and comes from a fund house that has a good track record of asset management. I would only like to add that such funds should not occupy more than 15% of your overall equity portfolio.
Nagabhushan asked, Hi, How about Investing in infrastructure bonds ?, Is it worth to invest ?
Sailesh answers, hi, I have ansered this question earlier in the chat. I would not recommend investors invest Rs 20,000 in this bond. Back of the envelope calculations suggest that average return pre-tax will not be more than 7.70%. This is equal to or less than the bank FD rate for a year. Investos would be better off paying the tax and investin the money in equity funds. If they do not want to take very high rsik then MIPs can be considered which invest 20-25% into equity and rest in debt securities. A well managed MIP can definitely give you a return higher than 7.70% over the next 10 years.
ramarajan asked, sir, I compared insurance premiums of different companies, and found Aegon Religare is best. But I doubt about the company's life itself. Is that a valid doubt, please clarify
Sailesh answers, hi, if you have doubt stick to more solid names like LIC and HDFC. Pay a littlet higher premium if you want peace of mind!
hb asked, Sir, Which Term Plan should I go for? I am 35 yrs and want a sum assurance for atleast 35 lakhs. What would be the premium range shouls I consider LIC (Its premium is more compared to other Private Sectors, pls advice
Sailesh answers, hi, according to me the premium should not be more than 15-20k p.a. You can got to the website of any insurance company and use their online premium calculator to calculate the premium payable by you. Also, I would stronbgly recommend that you increase your risk cover to Rs 50 lakhs.
u asked, I have invested in Bajaj Allianz First Secure ULIP fund with investment of 30k p.a. since 2007. Do I need to stay invested in the scheme or should I hold for further 3 years?
Sailesh answers, hi, since you have already paid the premiums, I would recommend that you continue with the same. I dont recommend ULIPs at all to any investor. Typically it will take 7-8 years for the ULIP to brea even. Once you have made some money on your ULIP, you can consider surrendering the same.
munno asked, Sir. I am Poor. I can invest just Rs 500 per month. Not more. please show me best investment option with moderate risk and 20 years time span
Sailesh answers, hi, dont worry. Start an SIP in Fidelity Equity Fund. Be patient and disciplined. I am sure you will be able to build wealth for yourself over the next 20 years.
IKnowABCOfInvestment asked, I have Birla SL Dividend YieldPlus, DSP Br Top 100, DSP BR Equity,Reliance Equity Opportunities and Fidelity India growth funds with me. All via SIP route and in growth option. I am investing from past 8 months and plan to hold for arnd 4-5 years. Is the portfolio good ?
Sailesh answers, hi, I would recommend that you stop your SIP in Birla Dividend Yield Fund. Rest all funds are good. Consider adding HDFC Equity Fund to your portfolio.It is like having Sachin Tendulkar in your cricket team!
bas2010 asked, Thank you sir for giving insights into Gold Funds, saw your answer given to Mr. prknimesh say if I invest in Gold Funds for 5 years and in due course buy some 300 units, if I sell back the funds, who will be the takers for it How to sell back these funds?
Sailesh answers, hi, you can buy and sell gold ETF on the BSE or NSE. So dont worry about selling the Gold ETFs.
vijaya asked, hi i would like to start investing now in the market for IPO and how do you rate oberoi realty IPO. is that a better option to start. i can invest upto 2000 per month, what ar the best MF that can give me good returns.
Sailesh answers, hi, I am not a big fan of IPOs. Retail investors are better off keeping themselves away from IPOs. Instead you can invest in stocks of existing companies with a an established track record. Still better, invest in diversified equity fund.
kansrin asked, Dear Sir can you suggest any Investment plan that can save tax as well as give good benifits?
Sailesh answers, hi, if you are a risk taking investor then you can consider investing in Equity Linked Saving Sceheme (ELSS). I recommend Fidelity Tax Advantage Fund among others in this category.
srini asked, I am 42, started investments in MF thro SIP of @10000/month from Feb'10 onwards, how long should I continue? I need corpous of Rs2 CR at my retirement. My investment are in equity.
Sailesh answers, hi, since you are build your retirement corpus, you should continue with your investment till retirement. Also, hold on to your investments till retirement. You havent mentioned your retirement age. Assuming you want to retire at the age of 60, you have 18 years to go. If your investments grow @ 10% p.a., you need to invest a sum of Rs 33,000 per month to reach the target of Rs 2 crores.
sen asked, Hi Sailesh, Pls let me know ur suugestion of investing in Gold Bees which is listed in NSE/BSE..
Sailesh answers, hi, its a good fund. You can consider investing in the same.
Anirban asked, Hi Sailesh, taking DTC(From 2011) in consideration, is investing in ULIPS advisable? If yes, could suggest some?
Sailesh answers, hi, DTC or no DTC, ULIPs should not be considered for investment or insurance. Investors would do well to stay away from them. If you want to grow your money, invest in equity funds ot stocks. If you want to proctect your life, then take a term plan.
Sanju asked, I am a beginner & want to invest in some fast growing investment plans. Could you pl explain some of them.
Sailesh answers, hi, I dont understand what you mean by fast growing investment plans. Assuming that you want to grow your money, you should consider investing in diversified equity funds and that too through the SIP. You should be willing to take high risk and invest for the long term, preferable 5 years and more.
Hardik asked, Dear Sir, I am 27. As per your estimate, what should be the liquid amount one should keep in hand every month?
Sailesh answers, hi, it seems you want to know how much should you keep aside as a contingency fund. The answer wold vary from individual to individual. ideally it should be sufficient enough to cover your household expense of 6-24 months plus your annual fixed cost like rent, insurance premium and EMIs.
Shailesh asked, Hi, I want to invest on my Parents behalf in such a scheme where they can get a monthly return. As they are retired now and they want some regular monthly income.pls advice..
Sailesh answers, hi, if your parents are 60 years and above, you can consider investing in 9% Senior Citizen Savings Sceheme. This scheme offers interest @ 9% which is payable every quarter. If they are not seniro citizens then you can consider schemes like Post Office Monthly Income Scheme or bank FD.
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. I will try and reply your questions in a day's time